Harper Creek mine reveals study results

A preliminary economic assessment by an independent consulting company of its proposed Harper Creek copper mine has shown positive results, according to Yellowhead Mining Inc.

A preliminary economic assessment by an independent consulting company of its proposed Harper Creek copper mine has shown positive results, according to Yellowhead Mining Inc.

Yellowhead’s board of directors recently approved releasing the results of the study. A report documenting the results was to be released before March 31.

According to the report, a 450-person camp would be established during construction. However, once the mine is operational, all mine and plant operating and maintenance labor are expected to be drawn from the local area.

The project is expected to employ 312 hourly and staff personnel. Based on industry experience approximately 1,000 jobs will be created in the surrounding communities to provide support to the project.

There would be a 22-year project life at a milling rate of 70,000 tonnes per day. Capital costs are estimated at $759 million. The breakeven copper price is determined to be US$1.94/lb using US$1,058 for gold and US$16.57 for silver.

The project would produce a total of 2.857 billion pounds of copper, 265 thousand ounces of gold and 4.87 million ounces of silver contained in concentrate.

Most of the waste rock will be used for the tailings starter dam and for other construction activities.

Over the project life it is estimated that an additional $481million in sustaining capital would be required.

The base case economic analysis projects that the Harper Creek project would have a net present value of US $598 million.

The study concept was based on the development of a large-scale open pit mining and milling operation. The mine would employ 42 m (55 yd) electric hydraulic shovels, 300 tonne capacity haul trucks plus support equipment.

Concentrate would be loaded on B-trains of nominal 40 tonne capacity for hauling to a rail facility in Vavenby, a distance of 25 km, for shipment from Vancouver to smelters/refineries in the Pacific Rim. Testwork indicates that the concentrate is clean with no smelter penalties expected.

Water from the tailings slurry would be reclaimed for use in the milling process. Low-grade material would be stockpiled for processing in the latter years of the mine life. The tailings management system would be located in a natural valley to the south of the plant in an area devoid of any fish habitat.

Mine infrastructure would include upgrading of an existing logging road over a distance of approximately 12 km.

An upgraded BC Hydro 138 kV transmission line would supply power approximately eight km north of the plant. BC Hydro, at Yellowhead Mining’s expense, is engineering an upgrade which would bring a new 230 kV line from 100 Mile House to connect to the existing transmission substation at Clearwater. The new 230 kV transmission line would also provide improved reliability of power to existing customers within the North Thompson River Valley. The company will be required to execute a take or pay contract with BC Hydro and put up a letter of credit (“LOC”) for approximately half of the capital cost, estimated at $130 million. The LOC will be reduced annually by the amount of the Company’s annual power purchases.

Following exhaustion of reserves, the project would close and be reclaimed according to the requirements of current legislation. All equipment and facilities would be removed and the area graded and seeded. Any contact water from the waste rock dumps would be directed into the open pit or waste management facility. The pit is estimated to fill more than 100 years post-closure. It is assumed that the pit water will require treatment prior to release to the environment. This annual surplus would be treated in a water treatment plant that would recover metals, including copper. The project capital cost includes funding for a surety bond to meet future reclamation obligations.

On Feb. 8 Yellowhead Mining submitted its draft Application Information Requirements to the BC Environmental Assessment Office for review by provincial and federal regulators.

Management’s plans for 2011 are

• Complete a Feasibility Study, scheduled to commence mid-April

• Drilling to support the Feasibility Study including geotechnical, hydrological, foundation testing, metallurgical and condemnation.

• Continue with the Environmental Impact Study with concurrent permitting

• Step out drilling to the east and north to increase the resource

 

• Investigate and implement opportunities for improvement in project economics.