The huge importance of Geo-technical holes
posted on
Dec 17, 2013 05:52PM
CUU own 25% Schaft Creek: proven/probable min. reserves/940.8m tonnes = 0.27% copper, 0.19 g/t gold, 0.018% moly and 1.72 g/t silver containing: 5.6b lbs copper, 5.8m ounces gold, 363.5m lbs moly and 51.7m ounces silver; (Recoverable CuEq 0.46%)
The 2013 drill program is very important in understanding the parameters of Schaft Creek. The Geo-technical holes are probably more relevant than the exploration holes when it comes to added-value as the pit size depends on the 2013 results from the geo-technical holes. In the end it is about extracting the ore in a safe way. The geo-technical holes is about understanding slope design and pit stability.
The huge amount of resources outside the Pit Shell (40% of Paramount zone) adds great value to the NPV/economics of Schaft Creek if the results prove to be successful.
The large amount of geo-technical data utilized in the feasibility study such as initial slope design and ongoing slope optimization are needed within databases for analysis. As more of these studies are collected and interpreted, the engineers are more confident in allowing the optimization of slope designs and blast designs on a regular basis. This reduces slope failures and make open pit operations more economic and safe.
We may not be a high-grade deposit but we do have decent grade Copper Eqv which is excellent for a large-scale Copper project as this bodes well with the economics. What makes Schaft Creek unique is the "four saleable metals" that add to the total NSR. What makes a deposit profitable is "economies of scale" this idea where the more you produce the lower your costs are. This reduction in expenditures allows for an attractive NPV even for a medium to low grade mineralized ore body. With improvements to the Block model, some of the inferred resources can also be converted to generating ore further improving the NPV of Schaft Creek.
These 2013 geo-technical holes are needed for the feasibility and engineering studies so Teck/Copper Fox Metals can optimize Slope Design and Pit Stability issues.
If the 2013 drill season is successful, we can expand and deepen the size of the Pit Shell of the open pit Operation allowing for safe access to the higher grade mineralization outside the pit which is not included in the feasibility study. This is a huge revenue generator once the metal values are incorported into the NPV/economics of the Schaft Creek. This one improvement would positively impact the mine life, production rate, strip ratio which would result in the NPV to improve immensely.
The number of geotechnical holes required for a particular project will depend on the level of available geological/geotechnical information at the site and the size and mine life of the project. The information gained from geotechnical investigations notably provides valuable information for mine design, but also assists with the development of a mineral resource estimate, and ultimately an ore reserve estimate. Particularly in marginal deposits, the geotechnical mine design limitations may define whether the resource can be classified as a reserve and therefore whether or not it should be mined.
This is why I keep alluding to the theory of Schaft Creek changing in size and scope once the 2013 results are known.
When understanding Pit Slope design and stability, you need to analyze: rock type, geological and structural mapping, core holes, waste sampling, rock mass, pit wall design (mine plan), ground water, blast design, slope angles, block model.
When it comes to understanding the overall grade of the Schaft Creek deposit, do you put more importance on Cu grade or Copper equivalent grading? (clearly I like the copper grade more as it does significantly impact the estimation of the copper equivalent grade. Also the ability to expand the block model to the east should also allow deepening the proposed pit to access the higher grade copper exposed in the bottom of the pit which in the current study due to safety constraints based on engineering cannot be recovered. If you look at the corporate presentation you will see the pit shell superimposed on the block model and there is a large chunk of higher grade copper at the bottom and in the east wall of the proposed pit shell that cannot be mined. However if the block model is expanded to the east based on the 2013 drilling then that should allow expansion of the pit limits, recovery of the higher grade copper on the east side of the proposed pit and conversion of the material now shown as waste to resources. If this occurs, then many aspects of the current FS related to strip ratio, revenue, mine life, etc. changes to the positive.)
Also note on Waste Conversion
"The current 940.8 million tonne mineral reserve should support a mine life of approximately 21 years (47.4 million tonnes per year). There is potential to extend the mine life with additional infill drilling to upgrade the approximately 171.16 million tonnes of current inferred resource located within the proposed open pit. Additional exploration of the Schaft Creek deposit to the east and the north of the Paramount zone and north of the Liard zone as well as the recently discovered Discovery zone could extend the mine life of the Schaft Creek project" (Feasibility Study).
IMO, I strongly believe this is what will happen in the near future:
1) The joint venture team will undergo a revised BFS to understand the real value (intrinsic worth) of Schaft Creek
2) If a fair value deal is not reached expect Copper Fox Metals to stay until we receive EA permits which would value the deposit at 5% discount rate and prove to the mining industry that Schaft Creek will be a profitable mine. The odds are favourable we will get permitting for this project so why not wait a bit longer (1 year) for that huge value-add.
Thanks