Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Putting Galore Creek into production would cost a whopping $5.2 billion in capex, NovaGold Resources said this week in announcing their prefeasibility study of the substantial copper–gold- silver project in northern British Columbia.
The proposed mine, located 200 kilometres north of Stuart, BC, is 50%-owned by NovaGold and 50% by Teck Resources.
As reported in Canadian Mining Journal, the high capital cost of the mine put the brakes on the project 5 years ago, but a redesign and significant increase in scale has made the project technically and economically feasible according to the PFS.
CMJ also notes that Galore Creek would become one of the largest and lowest-cost copper producers in North America, with base case cash costs of US 80 cents per pound of copper. At current metals prices, cash costs would only be 42 cents per pound.
The new design involves a 14-kilometre tunnel between two valleys that will be used to transport ore from the Galore Valley, where the pits are located, to the West More Valley, where the mill and tailings facility would be built. Having the latter in another valley frees up room in Galore Creek for mining, President and CEO Rick Van Nieuwenhuyse noted during a webcast released Thursday.
“Having the mill and tailings facility in the West More Valley really enhances the overall project design,” he said.
The PFS is predicated on mineral reserves of 528 million tonnes, which includes 6.8 billion pounds of copper, 5.5 million ounces of gold, and 102 million ounces of silver.
The open-pit mine would have an 18-year life, and produce, on average, 322 million pounds of copper a year, 208,000 ounces/yr of gold, and 3 million ounces/yr of silver. Mill throughput using a standard flotation circuit is estimated at 84,000 tpd during the life of the mine. The mill would produce a single copper concentrate containing gold and silver, with recovery rates of 91% copper, 73% gold, and 64% silver.
The 5.2 billion capital expenditures budget includes $356 million to build the mine, $835 million for the mill and tailings impoundment, $579 million for the tunnel, and $697 million in infrastructure costs. A 15% contingency fund worth $678 million is also budgeted.
Van Nieuwenhuyse said the scale of the project has significant upside potential, considering the opportunity to increase resources and minelife. He said the “enhanced plan” is to convert about 200 million tonnes of inferred resources into the mine plan, through infill drilling. Three drill rigs are currently on site to upgrade these mineral resources, he said, which would also result in an extension of the tunnel by 4K to accomodate the transport of more waste rock.
The PFS recommmends that the project proceed to the feasibility stage, that more infill and geotechnical drilling take place, and that further metallurgical tests be carried out to increase gold, silver and copper recoveries.
Image of the proposed pit design for Galore Creek, courtesy of NovaGold Resources Inc.
Comments
Tom Bob
5.2 B that’s as much at Oyu Tolgoi and only a shadow of the size and grade.