Wolfden gets positive numbers on Arctic projects (June 28, 2006)

Preliminary economic assessments of the Izok, Ulu and High Lake deposits in Nunavut’s western mainland, done for owner Wolfden Resources (WLF-T), indicate positive economics when the three projects share infrastructure and the Lupin mill.

Developing the Izok deposit, which has an indicated resource of 14.4 million tonnes grading 12.94% zinc, 2.52% copper, 1.28% lead and 71 grams silver per tonne, would cost about $539 million. But at conservatively estimated metal prices the project would have an internal rate of return of 15.4% and a net present value of $483 million based on a 5% discount rate.

At a “high-price” case, still with prices lower than current ones, the net present value rises to $2.6 billion and the rate of return to 45.9%. Cash production costs are calculated at US34 per lb. (US$750 per tonne) of zinc.

High Lake has weaker economics than Izok; it suffers from higher fuel and transportation costs and lacks Izok’s grade. The deposit, which has an indicated resource of 17.3 million tonnes grading 3.35% zinc, 2.25% copper, 0.31% lead, 0.95 gram gold and 69.7 grams silver per tonne, would have an internal rate of return of 11.1% and a net present value of $99 million in the base case.

Building a mine would cost $333 million and its cash cost of production would be US63 per lb. (US$1,390 per tonne) of copper.

Ulu, a gold deposit with an indicated resource of 720,000 tonnes grading 11.7 grams gold per tonne and an inferred resource of 410,000 at 10.7 grams per tonne, would produce gold at about US$263 per oz. Its capital cost is estimated at $61 million and the base-case cash flow analysis puts its return at 20.9% and its net present value at $33 million.