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.
Northwest Copper (TSXV: NWST) shares surged 17% Monday afternoon on assay results from its Kwanika copper-gold deposit near the town of Fort St. James in central British Columbia.
The company reported hole K-22-255 cut one of the longest and highest-grade copper-gold intervals ever drilled at Kwanika, returning 399.8 metres of 0.62% copper, 0.74 gram gold per tonne and 2 grams silver per tonne (1.01% copper-equivalent) from 152.2 metres downhole.
The drillhole included higher grade assay intervals including 23.4 metres grading 2.12% copper, 0.7 gram gold and 6.2 grams silver (2.51% copper-equivalent); 64 metres of 1% copper, 2.17 grams gold and 2.9 grams silver (2.12% copper-equivalent); and 22.5 metres of 1.15% copper, 2.95 grams gold and 3.6 grams silver (2.67% copper-equivalent).
“The hole shows a typical Kwanika pattern of copper dominant material higher in the hole then becoming much richer in gold at depth,” CEO Peter Bell said in a news release.
Northwest Copper noted that the bottom of the hole ended in copper and gold mineralization.
The hole was not included in a preliminary economic assessment the company announced on Jan. 5. The PEA analyzed combining the Kwanika and nearby Stardust deposits. Stardust is a small but higher grade deposit.
The early-stage study envisioned an open pit and underground mining operation with a life of 11.9 years. The 22,000-tonne per day operation would produce copper and gold in a copper concentrate. The project would deliver 90.5 million lb. of copper-equivalent output per year at a cash cost of $1.58 per lb. copper-equivalent and an all-in sustaining cost of $2.01 per lb. copper-equivalent.
Initial capex was pegged at C$567.9 million with an after-tax payback of 6.4 years. Total operations capex came in at C$1.3 billion, which includes underground development and sustaining capital.
The study outlined an after-tax net present value at a 7% discount rate of C$215 million and an internal rate of return of 12.7%.
In the mine plan, 95.6 million tonnes of mineralized material and 86.9 million tonnes of waste would be mined over the mine life. Life-of-mine average grades are pegged at 0.39% copper, 0.39 gram gold per tonne, and 2.21 grams silver per tonne for a copper-equivalent grade of 0.62%.
A tailings storage facility would accommodate over 96.3 million tonnes of tailings produced over the mine life. The facility would be built in a valley east of the Stardust deposit and upstream of the processing plant.
Material would be mined from four areas: the Kwanika Central open pit in years one to four; Stardust underground (years four to nine); the Kwanika Central underground block cave (years four to 12); and Kwanika South open pit (years nine to 12).
This year the company will be studying whether to combine Kwanika-Stardust with its Lorraine project, about 40 km away.
