Positive prefeasibility keeps Kutcho moving forward

Vancouver — A solid prefeasibility study is keeping Western Keltic Mines’ (WKM-V, WLKTF-O) Kutcho project in northern B.C. on track to become one of Canada’s next major copper-zinc mines.

The study predicted annual metal production for the first five years would average 75.5 million lbs. copper, 93.5 lbs. zinc, 753,550 oz. silver, and 7,813 oz. gold after a capital cost investment of $299 million. Net present value is estimated at $154 million, using an 8% discount rate.

Initial mining life is forecast at eight years, with capital payback achieved in the first 2.6 years. Production is expected in 2010 and under normal operations, the mine would employ 250 permanent workers.

The main deposit is to be developed as an open pit, 1,500 metres long by 450 metres wide. After five years, underground production from the higher-grade Esso deposit will supplement the open-pit operation. Daily mill feed will be 6,000 tonnes, resulting in 17.1 million tonnes mined over eight years.

A conventional flotation plant will operate year-round, at an annual rate of 2.2 million tonnes.

The main deposit at Kutcho holds probable reserves of 15 million tonnes grading 1.56% copper, 2.09% zinc, 25.02 grams silver and 0.31 gram gold per tonne. The smaller Esso deposit contains 2 million indicated tonnes of 1.97% copper, 3.5% zinc, 33.21 grams silver, and 0.43 gram gold.

The economic analysis did not include any contribution from the Sumac deposit, which contains only an inferred resource: 10.6 million tonnes at 0.94% copper, 1.45% zinc, 13.96 grams silver and 0.14 gram gold.

Western Keltic plans to begin a full feasibility study in the coming weeks, to be completed in the second quarter of 2008, and expects to finish the environmental assessment a few months later.

As soon as the environmental assessment is in hand, work will begin on the road, construction of which is expected to take almost a year. A 4×4 road currently runs the 100 km from the project west to the town of Dease Lake, in north-central B.C.

Site construction would begin in early 2009, finishing in fall 2010.

The Kutcho property was discovered in 1968 by Imperial Oil, which later became Esso Minerals Canada. Over the next 40 years, various companies took on the project and exploration advanced slowly. In 1985, Imperial Oil, working with Sumitomo Metal Mining of Japan, completed a prefeasibility study. Copper prices were too low for the project to be economic at the time.

Western Keltic acquired the project in March 2004. Over the next two years, the company explored the property aggressively, releasing an updated resource estimate each January. Keltic closed a $5.8-million private placement in June 2006, with another $9.97-million financing in February 2007.

Two months later, the company announced a $4.2-million summer field program to advance Kutcho, including construction of a 40-person camp, 5,000 metres of drilling aimed at upgrading resources, preliminary work for infrastructure development and improvement to the access road, and environmental, fisheries, and archeology studies to help with permitting.

In April, the company announced a letter of understanding with Tahltan Nation Development, a corporation owned by the Tahltan Nation, on whose land the Kutcho property sits. In the letter, the parties agreed to discuss a contract for upgrading the site’s access road. Later that month, Kutcho and Stewart Bulk Terminals signed an agreement committing both parties to discuss plans to provide concentrate storage and loading facilities in the port of Stewart.