Yellowhead Mining Inc. was formed in 2005 as a private British Columbia company specifically to acquire, explore and, if feasible, develop the Harper Creek deposit. The Company’s development strategy post-feasibility completion is to engineer, permit, finance, construct and operate the project.
Between its formation and its listing as a public company on the TSX Venture Exchange in November 2010, Yellowhead Mining Inc. raised $23 million. In April 2011 the Company raised $25 million in a bought deal financing. The Company graduated to the Toronto Stock Exchange (TSX) on June 11, 2012 and commenced trading in the United States on the OTCQX International on August 23, 2012.
In 2005 and 2006, five claim groups were acquired or optioned by Yellowhead Mining on the historical drilling area and contiguous parts of the Eagle Bay Assemblage, the mineralogical group which includes the Harper Creek deposit. Noranda Exploration and US Steel discovered the deposit in 1966. The two companies conducted exploration separately until 1971, when they formed an exploration joint venture. This ceased in 1981. Drilling by US Steel and Noranda on the main deposit totalled 25,806 metres in 161 holes. In 1996, American Comstock drilled 2,847 metres in 8 holes. Yellowhead has acquired the data from the prior programs and recovered partial or complete drill core from 128 historical holes on site.
During late 2005 and early 2006, the Company re-logged and re-analysed historical drill core recovered from the site, and produced a NI 43-101 technical report. In 2006, Yellowhead completed a 1,000 line kilometre airborne geophysical survey over approximately 90 square kilometres, identifying several high priority targets for further exploration. From 2006 to 2010 the Company drilled a total of 33,724 metres in 86 holes. The Company continued drilling with 15,148 metres in 56 holes in the 2011 drilling
In support of the Feasibility Study, the Company has completed a total of 17,800 metres of drilling to December 31, 2011, including:
- Resource confirmation: 37 holes for a total of 10,843 metres
- Condemnation: 8 holes for a total of 1,791 metres
- Resource expansion: 11 holes for a total of 4,725 metres
- Metallurgical sampling: 4 holes for a total of 441 metres
As of December 2011, drilling at Harper Creek has totalled 318 holes for 78,164 metres.
The Harper Creek Project is an extensive volcanogenic sulphide system, with a mineralized envelope greater than 2.5 kilometres along strike, over 2.0 kilometres down dip, in a 1 kilometre thickness of volcano-sedimentary stratigraphy. Copper mineralization is tabular, striking east-west and dipping about 15° to 25° to the north with a number of high copper grade cores that persist with depth within a multiphased stringer zone. The deposit is open along strike to the east, down dip and at depth.
An independent Technical Report and Preliminary Economic Assessment of The Harper Creek Project was filed on April 1, 2011 and was completed by Wardrop, a Tetra Tech Company, (“Wardrop”). Wardrop was supported by:
- Knight Piésold Limited ("KP"): mine waste and water management
- Dillon Consulting Limited ("Dillon"): environmental
- G&T Metallurgical Services Limited ("G&T"): metallurgical test work with the announced results of the Preliminary Economic Assessment:
The base case economic analysis projected that the Harper Creek Project’s estimated net present value was US$598 million (@ 8% discount rate) and an internal rate of return of 19.8% based on 100% equity financing using long-term metals prices of US$2.66/lb Cu, US$1,058/oz Au and US$16.57/oz Ag. Based on these positive results, the Feasibility Study was commenced on April 13, 2011.
On March 2, 2012, the Company reported the results of the independent Harper Creek Feasibility Study (“FS”). The NI 43-101 compliant Technical Report for the FS is available on www.sedar.com.
- The project estimated pre-tax NPV8 is US$749.7 million with an IRR of 20.2% and after tax is US$465.3 million with an IRR of 17.0% for a 28 year project life at a milling rate of 70,000 tpd (25.55Mt/y), based on long-term metal price projections of US$2.50/lb Cu, US$1,250/oz Au and US$20/oz Ag, and a US$:Cdn$ exchange rate of 0.86:1.
- Capital costs are estimated at $838.95 million1 +/- 15% in Q4 2011 dollars, including contingency of 10% or $76.4 million.
- Life of Mine (“LOM”) onsite cash operating costs, including precious metal credits, are estimated at US$0.95/lb Cu (US$0.80/lb for the first 5 years) and total onsite and offsite cash cost (including precious metal credits) is estimated at US$1.56/lb Cu.
- LOM2 cash operating costs per tonne milled are estimated as follows: Mining $2.82; Milling $3.12; Site Services $0.28; General & Administrative $0.38 for a total of $6.60/t milled.
- The project as designed is expected to produce a total of 3.63 billion pounds of copper, 372,000 ounces of gold and 14 million ounces of silver contained in concentrate.
- LOM stripping ratio is estimated at 0.81:1. The mill is also scheduled to process ore recovered from low grade stockpile for the last 5 years of operation. During pre-production in Year -1 a total of 30 million tonnes is expected to be mined predominately for roads, tailings starter dam and other civil construction activities.
- The FS is based on an updated resource (refer to press release dated February 16, 2012). At a 0.20% Cu cutoff Measured Resources are estimated at 348.5Mt at 0.31% Cu, 0.034 g/t Au, 1.3 g/t Ag; Indicated Resources at 466.5Mt at 0.28% Cu, 0.03 g/t Au, 1.3 g/t Ag for a total Measured and Indicated Resource of 815Mt at 0.29% Cu, 0.032 g/t Au and 1.3 g/t Ag. A further 80.17Mt at 0.30% Cu, 0.033 g/t Au, and 1.4 g/t Ag are estimated in the Inferred Resource category and is reported as waste in the mine production schedule until it can be upgraded by additional infill drilling.
- Total mineable reserves were determined by pit optimization runs
using a Lerchs-Grossmann
algorithm to determine the “optimum” pit limit. At a 0.14% Cu cutoff, Proven Reserves are estimated at 401.18Mt @ 0.272% Cu, 0.031 g/t Au and 1.15 g/t Ag; Probable Reserves 303.22Mt @ 0.248% Cu, 0.027 g/t Au and 1.13 g/t Ag for a total Proven and Probable Reserve of 704.4Mt @ 0.262% Cu, 0.029 g/t Au and 1.14 g/t Ag.
- Sustaining capital over the project life is estimated at $293.2 million.
The following table details production estimates by period:
The base case economic analysis is based on the following long term metal price projections: US$2.50/lb Cu (based on a US$:Cdn$ exchange rate of 0.86:1 taken from an established historic relationship with copper prices), US$1,250/oz Au and US$20/oz Ag. Based on the above capital and operating cost estimates, the Harper Creek Project is estimated to have a pre-tax net present value of US$749.7 million (@ 8% discount rate) and an internal rate of return of 20.2% based on 100% equity financing.
The following table demonstrates the sensitivity of project economics to changes in copper prices. Corresponding foreign exchange (“FX”) rates are taken from the established historical relationship which demonstrates a very strong copper price to US$:Cdn$ FX rate correlation. Gold and silver prices are unchanged from the base case prices of US$1,250/oz and US$20/oz respectively.
Feasibility Study Team
The FS team is comprised of:
- Merit Consultants International Inc. (“Merit”): FS study management as well as providing capital cost estimating, financial analysis, project scheduling and implementation strategy
- Knight Piésold Limited (“KP”): geotechnical, mine waste and water management
- Allnorth Consultants Limited: process plant and facilities design
- GeoSim Services Inc.: resource estimation
- Nilsson Mine Services Ltd.: reserve estimation, mine planning and scheduling, mine capital and operating costs
- Laurion Consulting Inc.: metallurgy, plant flowsheet design, process operating costs
The following also provided support to the FS:
- CME Consultants Inc.: drilling, geological interpretation, QA/QC
- G&T Metallurgical Services Limited (“G&T”): metallurgical test work
- KWM Consulting Inc.: comminution
- SRK Consulting Ltd.: geochemistry
- Lawrence Consulting Ltd.: geochemistry, water treatment
- Cliveden AG: marketing
The Company provided overall support and guidance to the project especially in the areas of operating and staffing philosophy, marketing and financial analysis.
The FS design is based on the development of a large-scale open pit mining and milling operation and essentially follows the concept developed in the Preliminary Economic Assessment (“PEA”) completed by TetraTech and filed on www.sedar.com on April 1, 2011. The main changes were the location of the primary crusher which was moved closer to the pit limit with a resulting lengthening of the coarse ore conveyor and reduction in hauling costs to the crusher. Following extensive crushing and grinding test work conducted by FLSmidth primarily at their Bethlehem, PA laboratory, together with improved recovery at a coarser grind size, the Company was able to reduce the expected power draw by the ball mills, compared to the PEA estimate, by 25% and eliminate two crushers for SAG mill coarse pebble rejects. This resulted in a reduction in capital cost for crushing and grinding and significantly reduced milling costs.
The mine will employ 311mm (12¼") electric and diesel rotary blast hole drills, 42m³ (55yd³) electric hydraulic shovels, 240st capacity haul trucks plus support equipment. Bulk heavy ammonium nitrate slurry explosives will be delivered down the blast holes by a third party vendor. The mill feed will becrushed by a 1.5m (60") x 2.3m (89") gyratory crusher to a nominal 80% passing 200mm (8"). Crushed material will feed a stockpile of nominal 70,000t live capacity, before being reclaimed to the process plant.
Plant design is based on a single line flow sheet employing SAG and ball milling, flotation including regrinding, thickening and filtering to produce a concentrate for export averaging 25.5% Cu together with gold and silver credits. The primary grinding circuit includes an 11.6m (38') x 6.7m (22') SAG mill with a 20MW (26,800HP) gearless drive feeding two 7.3m (24') x 12.8m (42') twin pinion drive ball mills,13MW (17,400HP) total for each mill, providing a primary grind size of 80% passing 180µm. Primary grinding circuit discharge feeds two banks of six 300m³ rougher flotation cells. The rougher concentrate will be reground by two M10000 (3MW each) Isamills to 80% passing 20 µm prior to two stages of cleaner flotation by column flotation cells. At a 0.33% Cu head grade in Year 1, the recovery of copper to concentrate is estimated at 91.1%. The primary and regrind product sizes and flotation parameters were determined by G&T. Test work indicates that the concentrate is clean with no elements at smelter penalty levels and both gold and silver at payable levels.
Concentrate will be loaded on B-Trains of nominal 40t capacity for hauling to the rail load-out facility in the town of Vavenby, a distance of approximately 25 kilometres, for rail shipment to the Port of Vancouver, a distance of 450 kilometres. From there it will be shipped to smelters/refineries most likely in the Pacific Rim. In November 2011, the Company announced the purchase of an old Weyerhaeuser sawmill site in Vavenby, with an existing rail siding, for its concentrate load-out facility.
Water from the tailings slurry will be reclaimed from the Tailings Management Facility (“TMF”) for use in the milling process. The TMF has the capacity to store all tailings and submerge any potentially acid generating waste rock. Low grade material will be stockpiled to the south of the pit for easy reclaim for processing in the latter years of the mine life. The TMF is located in a natural valley to the south of the plant in an area devoid of any fish habitat.
Mine infrastructure includes upgrading of an existing logging road over a distance of approximately 12 kilometres. A 600 person camp will be established for construction workers at site; most of the mine and plant operating and maintenance labour is expected to be drawn from the local area.
Power will be supplied by an upgraded BC Hydro 138 kVA transmission line that parallels the Yellowhead Highway, approximately 10 kilometres north of the plant. The upgraded transmission line will also provide improved reliability of power to existing customers within the North Thompson River Valley and provide capacity for expansion to the existing industrial base. The Company's expected connect date is March 2015.
The project is expected to employ up to 430 hourly and staff personnel. Based on industry experience, approximately 1,000 to 1,200 jobs will be created in the surrounding communities and elsewhere within the province to provide support to the project.
Following exhaustion of reserves, the project will close and be reclaimed according to regulatory requirements. All equipment and facilities will be removed and the area graded and seeded.
The Company and its consultants have been collecting a wide range of project-specific environmental baseline data. In 2007, the Company initiated water quality and fisheries inventory work. Comprehensive water, archaeology, wildlife, fisheries inventories and other baseline studies were started in 2011 and are expected to be completed by fall 2012. On October 21, 2011, the Company announced that the British Columbia Environmental Assessment Office (“EAO”) approved the Application Information Requirements (“AIR”) for Harper Creek. The AIR, or Terms of Reference, specifies the information that must be contained in the Application for an Environmental Assessment Certificate pursuant to both the BC Environmental Assessment Act (“BCEAA”) and the Canadian Environmental Assessment Act (“CEAA”). The Project Description and Application Information Requirements is available on the BC Environmental Assessment Office (“BCEAO”) website www.eao.gov.bc.ca.
Yellowhead Mining Inc. Harper Creek Copper-Gold-Silver Project: Updated Project Description, January 2011 [report]
Harper Creek Copper-Gold-Silver Project: Application Information Requirements as Approved by the Environmental Assessment Office on October 21, 2011 [report]
In parallel with the Feasibility Study, management of the EA and geotechnical/hydrological work is being undertaken by Knight Piésold Limited (“KP”). Assistance on the collection of information needed for the EA application is being provided by Dillon Consulting Ltd., (water quality), SRK Consulting (Canada) Inc., (geochemistry), BioteQ Environmental Technologies Inc., (water treatment), Terra Archaeology (archeological) and Keystone Wildlife Research (wildlife). Laurie McNeil and Associates is conducting the socio-economic assessment and review of the project. Representatives of the local First Nations communities were recruited to provide input and assist these specialists with the collection of baseline information.
The EA Application is scheduled for submission in the fall of 2012. Environmental monitoring will continue for the life of the project.
The Company recognizes its responsibility to involve local First Nations and other communities in the North Thompson Valley, and has begun consultation with these groups which include visits to the mine site. The Company intends to conduct its exploration and development of Harper Creek in an environmentally, socially and economically responsible manner and maintain operations that are in the best business interests of the Company's shareholders, First Nations and local communities.
The Company has signed General Services Agreements with Simpcw First Nation and the Adams Lake Indian Band. Both communities have been involved with the collection of baseline information to support the EA application. The Company is in the process of negotiating a Benefit Sharing Agreement with Simpcw First Nations, and looking at ways to work with local First Nations on employment and training opportunities associated with the construction and operation of the Harper Creek Project.
The Company’s announcement on February 16, 2012 of its updated resource estimate showed that its program of infill and step out drilling expanded the resource by 47%. The Measured and Indicated resource at a 0.2% copper cut-off grade stands at 815Mt at 0.29% Cu, 0.032 g/t Au and 1.3 g/t Ag. A further 80.17Mt at 0.30% Cu, 0.033 g/t Au and 1.4 g/t Ag are estimated in the Inferred resource category. The deposit remains open along strike to the east and west, down dip to the north, up section to the south and at depth. The Company plans to continue step out drilling to expand the existing resource and to identify new deposits within our mineral tenures.
- In November 2011, the Company closed an agreement acquiring the former Weyerhaeuser Company Limited sawmill property in Vavenby, BC, about 2.5 kilometres west of Vavenby. The acquisition included the remaining buildings, offices and statutory rights of way. The purchase price was CAD$2,222,728 including transaction costs. The property comprises approximately 79.3 hectares and has an approximately 1,880 metre rail siding connecting to the Canadian National Railway’s transcontinental main line that passes through Vavenby. The rail load-out will be located approximately 25 kilometres by road from the Harper Creek Project mill site. The property provides room for concentrate storage, rail access and staging grounds for the construction phase.
- The Company released an updated resource estimate on February 16, 2012, dated December 20, 2012, prepared by Ron Simpson, P.Geo. President of Geosim Services Inc., an independent “Qualified Person” under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). This resource estimate was incorporated in to the Feasibility Study
Some of the company's plans for 2013 include:
- File the Environmental Assessment Application in early 2013
- Continue consultation with local First Nations and communities in the North Thompson Valley
- Continue a step-out drilling campaign in order to expand the Company’s resource base, subject to available funds
- Move forward project financing and strategic partnership discussions
- Commence detailed engineering for long-lead pieces of equipment
- Conduct investor relations programs in North America and internationally
Corporate Profile on Stockhouse
Alastair Tiver P.Eng., MBA
Vice President, Operations
Mr. Tiver holds a Bachelor of Engineering in Mining, from South Australian University along with an MBA from Curtin University in Western Australia. He has 24 years of broad international experience in operating and consulting roles ranging from exploration stage to large scale operating mines in a variety of commodities. Most recently as the Chief Engineer of Copper Mountain Mining Corporation, he was a key member of the management team responsible for bringing the Copper Mountain Project, located near Princeton, British Columbia, back into production. Prior to Copper Mountain, he was with bcMetals Corp. as its Chief Mining Engineer. bcMetals advanced the Red Chris copper/gold porphyry project to a pre-development/financing stage at which time that company was taken over by Imperial Metals Corp.
Dr. Charlene Higgins M.Sc., Ph.D.
Vice President, Environment, Community & First Nations Relations
Dr. Higgins has a Master of Science and a Doctorate Degree in Ecology from the University of British Columbia. She has over 14 years' experience working with Aboriginal communities and organizations as a senior policy advisor and negotiator. She has participated as an expert and advisor in international (United Nations), national and provincial arenas on issues pertaining to the sustainable use and management of natural resources. Dr. Higgins is a member of the Canadian Standards Association (CSA) Technical Committee on Sustainable Forest Management, the Programme for the Endorsement of Forest Certification schemes (PEFC) National Governing Body, and the BC First Nations Environmental Assessment Technical Working Group.
T. Gregory Hawkins P.Geo.
Mr. Hawkins has been involved in the Mining Exploration and Investment industry since 1969. He has been variously responsible for the identification and/or delineation of 10 mineral deposits in Canada, USA, Chile, Ghana, Mali and Zaire (DRC). In acting as Founding Project Consultant and/or Founding Director of seven public and privateExploration/Development ventures he has participated in or been responsible for the definition of at least one resource/reserve in every case with four cases resulting in production in the USA, Chile, Ghana and Mali. In 1990 he started CME, an international full service consultancy and contracting firm, which grew to include Spectral International Geophysics, Eagle Drilling and ATS Inc.