Northern Dynasty expands Pebble

Resources at Northern Dynasty Minerals‘ () Pebble gold-copper project, 380 km southwest of Anchorage, Alaska, have swelled following 19,948 metres of drilling in 59 holes.

Norwest Corp., an independent engineering services company, estimates that the inferred resource is 2.74 billion tonnes grading 0.55% copper-equivalent (or 0.3 gram gold per tonne, 0.27% copper and 0.015% molybdenum), based on a cutoff grade of 0.3% copper-equivalent. The estimate also takes into account 18,353 metres in 110 holes sunk by Cominco American in the early 1990s.

The new estimate is nearly triple the 1 billion tonnes grading 0.3% copper and 0.4 gram gold per tonne (at the same cutoff grade) estimated in March 2003 by Australian-based Snowden Mining Industry Consultants.

The figure is equivalent to 16.5 billion lbs. copper and 26.5 million oz. gold, making Pebble North America’s largest deposit of contained gold and the continent’s second-largest deposit of contained copper, according to Metals Economics Group of Halifax, N.S.

Globally, Pebble’s contained gold resource trails only Freeport-McMoRan Copper & Gold‘s (FCX-N) massive Grasberg mine in Indonesia and is a shade shy of Newcrest Mining‘s Telfer gold-copper project in Western Australia.

When the cutoff grade is more than doubled to 0.7% copper-equivalent, the resource becomes 435 million tonnes grading 0.49 grams gold, 0.42% copper and 0.021% molybdenum, or 0.84% copper-equivalent. Northern Dynasty says the higher-grade core suggests a quick payback of the capital required to build and operate a large-scale operation. Under Snowden’s previous calculation, the high-grade core amounted to 141 million tonnes grading 0.48% copper and 0.67 gram gold per tonne.

Northern Dynasty envisages low operating costs since mineralization averaging 350 metres in thickness is persistent over a 3-by-2-km area. Also, the stripping ratio will be low, given that there are only 5-25 metres of gravel overburden. The deposit remains open to the south, west and east under thickening cover.

The latest estimates employ metal prices of US80 per lb. for copper, US$350 per oz. for gold and US$4.50 per lb. for molybdenum.

Definition drilling is planned, followed by a preliminary sizing study and environmental base line measurements in anticipation of permitting. Also, the company has begun working on mine and mill design.

Northern Dynasty can acquire the 36 claims covering the Pebble deposit by paying Teck Cominco (TEK-T) US$10 million in cash or stock by Nov. 30, 2004, and purchasing Hunter-Dickinson’s 20% interest in shares at an independently appraised value.

Thereafter, the junior can earn a half-interest in the surrounding property by drilling 18,290 metres before Nov. 30, 2004 (about two-thirds of that is complete). A 2-year extension is available at a cost of 100,000 shares per year. Teck Cominco can enter into a 50-50 joint venture on the surrounding property or sell its half-interest to Northern Dynasty for US$4 million and a 5% net profits interest. Exploration potential is high, with the Pebble deposit covering about 5% of an 89-sq.-km hydrothermal sulphide system on the land package (T.N.M., July 7-13/03).