|
Little Deer Property (Copper)
Springdale Area, Newfoundland
 Page Index:
Project Overview
Objective
Background
Brief History
Property Geology
Mineral Resources
Whalesback Copper Mine
Preliminary Economic
Assessment
Metallurgical Test Work
Project Infrastructure
2011/2012 Program
QA/QC
Project Overview
| Ownership |
Thundermin and 50% joint venture partner
Cornerstone Resources Inc. own a 100% interest in the Little
Deer Copper Deposit and adjoining property. Thundermin has the
right to increase its interest to 75% by completing a
feasibility study and by arranging 100% of mine financing. |
| Operator |
Thundermin |
| Past Production |
Minor production by BRINEX 1970-72 from
adjoining Whalesback mine; minor production by Green Bay Mining
1973-74 via ramp |
| Deposit Type |
Cyprus type VMS deposit in ophiolitic mafic
volcanic rocks |
| NI 43-101 Resource |
Indicated 1,911,000 t @ 2.37% Cu, Inferred
3,748,000 t @ 2.13% Cu |
| Process |
Normal flotation process produces a clean,
high grade copper concentrate grading over 28% copper with over
97% copper recovery in locked cycle tests. |
| Mine Type |
Shaft/ramp -
underground |
| Location |
10 km north of Springdale, Newfoundland |
| Status |
P&E Mining Consultants Inc. completed a
positive preliminary economic assessment on
November 1, 2011. A major diamond drilling program is planned
for 2012 to commence upgrading the Inferred Resources to the
Indicated Resource category so that aa pre-feasibility or
feasibility study can undertaken. |
Objective
Thundermin Resources Inc. (“Thundermin”) and Cornerstone Resources Inc.
(“Cornerstone”) are exploring the Little Deer property to determine if
there are sufficient quantities of economic grade copper mineralization
on the property to support a viable mining operation. Exploration work
completed to date has been successful in outlining over five million
tonnes containing over 2.0% copper within the Little Deer Copper Deposit
(“Deposit”). The Deposit remains open along strike and to depth and the
prospects of increasing this resource appears feasible. The potential
increase of the current mineral resource is conceptual in nature and it
is uncertain whether further exploration will result in an expansion of
this mineral resource.
Hugh Harbinson & John Heslop with high grade
copper core
Background
The Little Deer copper property, which is located approximately 10 km
north of Springdale in north-central Newfoundland, consists of 276
mineral claims (65.3 km²) in four separate mineral licences. Three of
the licences (44 mineral claims) in the eastern part of the property
(the Little Deer, Duck Pond and East Licences) are subject to an option
agreement with Weyburn Investments Limited (“Weyburn”) whereunder
Thundermin and Cornerstone have exercised their option to earn a 100%
interest in the three licences. Thundermin will issue 5,075,188 shares
to Weyburn and Cornerstone will issue 2,351,916 shares to Weyburn to
complete the exercise of the option. The remainder of the Little Deer
property (Licence 12196M - 232 claims), which covers the past-producing
Whalesback mine, the Timber Pond zinc prospect, the Mine Brook gold
prospect and a 165 m wide sliver of property between the Duck Pond and
Little Deer Licences, which covers part of the Deposit, is owned
50%/50% by Thundermin and Cornerstone.
The Little Deer Licence is subject to a 2.0% net smelter returns (“NSR”)
royalty, 50% of which can be repurchased for $1,000,000. The Duck Pond
Licence is subject to a 3.0% NSR royalty. The East Licence is subject to
a 1.5% NSR royalty, 50%% of which can be repurchased for $1,000,000.
Licence 12196M is subject to a 2.0% NSR, 25%% of which can be
repurchased for $1,000,000.
Thundermin, under its joint venture agreement with Cornerstone, has the
right to increase its interest in the Little Deer property to 75% by
completing a feasibility study and by arranging 100% of the necessary
bank financing required to place the property into commercial
production.
Brief History
Copper mineralization was first discovered at Little Deer in 1952 by
Falconbridge Nickel Mines Limited. The property was mined by British
Newfoundland Exploration Company (“BRINEX”) from 1970 to 1972, with
access via a 1,144 m drift on the 244 m level from the Whalesback mine
to the north, and by Green Bay Mining Company from 1973 to 1974, with
access via a 329 m decline. At the cessation of mining operations in
1974, historical reserves of 210,200 t grading 1.53% Cu were reported
above the 245 m elevation (not National Instrument 43-101 (“NI 43-101”)
compliant).
Geological mapping, surface and borehole geophysical surveys and 6,815 m
of diamond drilling in 12 holes were undertaken by Mutapa Gold Corp.
(“Mutapa”) from 1998 to 2000. Mutapa intersected significant copper
mineralization below and to the west of areas previously mined (3.8% Cu
over a core length of 10.3 m in their westernmost hole). Mutapa returned
the property to the owners in 2000 due to low copper prices and the
desire to redirect their focus in the high-tech business.
Thundermin and Cornerstone acquired the Little Deer property from Weyburn in
June 2007 and to September 30, 2011 have spent approximately $7,500,000 on the
property. Exploration work included approximately 48,432 m of diamond drilling
in 82 holes, borehole Pulse EM surveys, assaying of core samples, lithogeochemical analysis on whole rock samples, a Differential GPS survey of
all recent and historical drill holes to determine accurate collar locations and
elevations, 227 line kms of VTEM airborne electromagnetic and magnetic surveys,
the completion of an updated NI 43-101 compliant mineral resource estimate, scoping level metallurgical test work on copper mineralization
from the Deposit and the completion of a positive Preliminary Economic
Assessment. This exploration work successfully confirmed the historical copper grades and
widths on the property extended the copper mineralization to a vertical
depth of approximately 1,000 m and a strike length of approximately 1,050m and
demonstrated the potential technical and economic viability of
establishing a new, profitable copper mine on the Little Dear Property.
Property Geology
The Little Deer volcanogenic massive sulphide (“VMS”) copper deposit
occurs within the Lush’s Bight Group which is a Cambro-Ordovician
sequence of ophiolitic mafic volcanic rocks consisting mainly of
intermediate to mafic pillow lavas with minor associated tuffs and
agglomerates which have been intruded by gabbroic stocks and dykes. The
main sulphide mineralization consists of disseminated, stringer and
semi-massive to massive, pyrrhotite (pyrite), chalcopyrite and locally
very minor sphalerite. The main copper-bearing zones strike
east-northeast at 075˚and dip approximately 75˚- 80˚ to the south. There
are eight similar VMS copper deposits in the Lush’s Bight Group with
reported resources of which the Whalesback and the Gullbridge are the
largest known to date at approximately 4.5 million tonnes (“Mt”) each.
These deposits belong to what is commonly referred to as the “Cyprus
type” of VMS copper deposit in that there are 17 such deposits with
similar characteristics in Cyprus.
Mineral Resources
At the cessation of mining operations in 1974, the historical reserve
calculated by the mine staff above the 245 m elevation was 210,200 t
grading 1.53% Cu (this reserve is not NI 43-101 compliant).
On June 22, 2011, an updated NI 43-101 compliant mineral resource
estimate was announced for the Deposit. P&E Mining Consultants Inc.
("P&E") of
Brampton, Ontario, estimated that the Deposit contains Indicated
Resources of 1,911,000 t at an average grade of 2.37% Cu and additional
Inferred Resources of 3,748,000 t at an average grade of 2.13% Cu (see
Table 1).
Table 1: Summary of Little Deer Mineral Resources (P&E, June 20, 2011)
| Resource Classification/Zone |
Tonnes |
Cu% |
Cu lbs (M) |
| Indicated Mineral Resources |
|
|
|
| Little Deer Zone |
1,911,000 |
2.37 |
99.8 |
| Inferred Mineral Resources |
|
|
|
| Little Deer Zone |
1,240,000 |
1.93 |
52.8 |
| Footwall Zone |
1,711,000 |
2.04 |
77.0 |
| Footwall Zone Splay |
797,000 |
2.64 |
46.2 |
| Total Inferred Resources |
3,748,000 |
2.13 |
175.9 |
Notes:
-
Mineral resources which are not mineral
reserves do not have demonstrated economic viability. The estimate of
mineral resources may be materially affected by environmental, permitting,
legal, title, taxation, socio-political, marketing, or other relevant issues.
-
The quantity and grade of reported
Inferred Resources in this estimation are uncertain in nature and there has been
insufficient exploration to define these Inferred Resources as an Indicated or
Measured mineral resource and it is uncertain if further exploration will result
in upgrading them to an Indicated or Measured mineral resource category.
-
The mineral resources in this press
release were estimated using the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions
and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and
adopted by CIM Council.
-
Ordinary Kriging was used for Cu grade
interpolation.
-
Grade capping of 15% Cu utilized on
composites.
-
A variable bulk density based on
numerous field measurements was used for tonnage calculations.
-
A copper price of US$3.42/lb (May 31 2011
24 month trailing average) and an exchange rate of US$0.95=C$1.00 was utilized
to derive the 1% Cu cut-off grade. Mining costs were C$40/t, process costs were
C$15/t and G&A was C$5/t. Concentrate freight and smelter treatment charges were
C$10/t mined. Concentrate mass pull was 7%, process recovery was 97%, smelter
payable was 96% and Cu refining was US$0.07/lb.
The updated mineral resource estimate for the Deposit is based on assay results
from 48,432 m of drilling in 82 holes completed by Thundermin and Cornerstone
since June 2007 and assay data from a total of 102 surface and 122 underground
historical holes that were drilled by BRINEX between 1961 and 1970 and Mutapa
between 1998 and 2000. The historical information was recovered from the
archives of the Newfoundland and Labrador Department of Natural Resources
in St. John’s, Newfoundland.
P&E undertook a new cross
sectional interpretation on approximately 10 m centers for the entire
Deposit and created a wireframe model of the 3-D solids in order to
determine an overall shape and volume for the Deposit. Copper grade data
for all samples assayed by Thundermin and Cornerstone from the 2007 to
2011 drill programs and all copper grade data recovered from the
historical drilling were used to calculate copper grade estimates for
the Deposit. Bulk density data collected by
Thundermin and Cornerstone from the 2007 to 2011 drill programs was
utilized for the calculation of bulk densities for the entire Deposit.
The substantial increase in
tonnage in P&E’s updated mineral resource estimate for the Deposit
results from a reinterpretation of the sectional data for the Deposit,
the inclusion of all of the historical assay data recovered from the
archives, the inclusion of assay data for 25 holes drilled by Thundermin
and Cornerstone since December 1, 2010 and the use of length-weighted
bulk density data for individual assay samples that was not used
previously.
Figure 1: Isometric Projection of Mineral Resource Domains (View Looking
North West)
Notes: Scale bar = 500 m
Red: Little Deer Zone
Blue: Footwall Zone
GGreen: Footwall Zone Splay
Whalesback Copper Mine
On October 20, 2011, Thundermin and Cornerstone announced encouraging new “blue
sky” potential for the adjoining, past-producing, 100%-owned Whalesback Copper
Mine (Figure 1). A digital compilation of data from 107 holes drilled in the
mineralized zone below and to the west of the areas previously mined suggest
that there is excellent potential for establishing additional copper resources
on the Whalesback property (see Figure 2 and Table 2).
Table 2: Significant Intersections halesback Copper Mine
| Hole No. |
From (m) |
To (m) |
Width (m)* |
Cu (%) |
| 9-43 |
-- |
-- |
6.10 |
4.50 |
| 9-43 |
-- |
-- |
3.35 |
4.01 |
| 8-28 |
119.79 |
125.27 |
5.48 |
3.23 |
| 9-90 |
39.93 |
44.2 |
4.27 |
2.96 |
| 9-88 |
36.58 |
44.96 |
8.38 |
2.88 |
| 9-47 |
160.02 |
166.12 |
6.10 |
2.90 |
| 9-85 |
41.15 |
45.70 |
4.57 |
2.55 |
| 9-52 |
73.15 |
80.01 |
5.33 |
2.51 |
| 9-78 |
51.82 |
60.96 |
9.14 |
2.44 |
| WB-61-45 |
201.47 |
207.26 |
5.79 |
2.23 |
| WB-65-99 |
65.53 |
68.58 |
3.05 |
2.25 |
| 9-38 |
21.03 |
24.38 |
3.35 |
2.29 |
| 9-92 |
27.43 |
35.97 |
8.54 |
2.20 |
| 9-79 |
68.58 |
81.69 |
13.11 |
2.13 |
| 11-3 |
67.36 |
75.90 |
8.54 |
1.99 |
Notes:
*Widths approach true thickness
--- Data taken from historical longitudinal section and no drill log available
Preliminary Economic Assessment
On November 1, 2011, Thundermin and Cornerstone announced a positive Preliminary
Economic Assessment (“PEA”) for the Deposit.
PEA Highlights
Base Case Scenario: (copper price of US$3.75/lb and an exchange rate of US$0.95
= C$1.00; all dollar amounts are expressed in Canadian dollars unless otherwise
stated)
- Mineral Resources: Indicated
Resources of 1,911,000 t grading 2.37% Cu (99.8 million lbs of copper) and
Inferred Resources of 3,748,000 t grading 2.13% Cu (175.9 million lbs of copper)
and 20% mining dilution at zero grade with 90% extraction rate incorporated into
the mine plan
- Mining: 1,800 t/day
underground mine with ramp and shaft access using long hole stoping method
- Mine Life: 9.5 years
- Conventional milling and
flotation process with 97% copper recovery to a clean 28% copper concentrate
- Initial Capital Cost: $110
million
- Average Site Operating Cost:
$47.32 per tonne of ore mined and milled ($1.16 per lb. of copper)
- Total Revenue: $829 million
- Pre-tax Net Cash Flow: $237
million: After-tax Net Cash Flow $166 million
- Pre-tax Net Present Value at
6% Discount Rate: $130.4 million. After-tax Net Present Value at 6% Discount
Rate: $86.7 million
- Payback of Pre-production
Capital: 3.5 years
- Internal Rate of Return
Pre-tax: 26.0%
- Internal Rate of Return
After-tax: 21.5%
Financial Evaluations
Financial evaluations of the Deposit were calculated by P&E using a discounted
cash flow analysis. On a 100% equity financing basis, the Base Case analysis
shows that the pre-tax Internal Rate of Return (“IRR”) is 26.0% and the Net
Present Value (“NPV”), at a 6.0% discount rate, is $130.4 million. The pre-tax
undiscounted cash flow for the project is $237 million and the payback of
capital from the commencement of commercial production is approximately 3.5
years. The Base Case analysis shows that the after-tax IRR is 21.5% and the NPV,
at a 6% discount rate, is $86.7 million. The after-tax uncounted cash flow for
the project is $166 million. The Base Case scenario assumes initial capital
costs of $110 million to advance the project to commercial production. The
average operating costs for life-of-mine is estimated to be $47.32 per tonne of
ore mined and milled. A projected 10-year average copper price of US$3.75 and
exchange rate of US$0.95=C$1.00 was used in the Base Case financial analysis.
The Base Case also includes the payment of certain underlying NSR royalties to
third parties. The sensitivity of the project to copper prices is shown in Table
1.
Table 3: Sensitivity of the Little Deer Copper Deposit to Copper Price
| Copper Price (US$/lb) |
3.25 |
3.50 |
3.75 (Base Case) |
4.00 |
4.25 |
| Pre-tax IRR (%) |
13.8 |
20.1 |
26.0 |
31.8 |
37.5 |
| After-tax IRR (%) |
11.1 |
16.3 |
21.5 |
26.6 |
31.7 |
| Pre-tax NPV ($million @ 6%) |
47.6 |
89.0 |
130.4 |
171.8 |
213.1 |
| After-tax NPV ($million @ 6%) |
27.4 |
57.1 |
86.7 |
116.3 |
146.0 |
Production Plan
The PEA was undertaken using a production rate of 1,800 t/day (657,000
t/year), resulting in a 9.5 year mine life for the project. Underground
access will be gained via a ramp, driven at 15%, and an 875 m production
shaft. It is envisioned that production from approximately the upper 400
m of the Deposit will be via ramp and production from the lower part of
the Deposit will be via the production shaft. Copper mineralization from
the Deposit will be extracted using a long-hole mining method using
mechanized trackless mining equipment (see Figure 3).
Copper mineralization from the Deposit will be processed in a new,
state-of-the-art, environmentally friendly mill employing differential flotation
to produce a high quality copper concentrate.
Approximately 46% of the tailings from the mill will be placed underground in
cemented hydraulic backfill. The remainder of the tailings are expected to be
submerged in the former Whalesback tailings impoundment facility which is
located approximately 1.2 km north of the Deposit.
Approximately 389,000 t of copper concentrate will be produced during the life
of the mine which equates to approximately 26 million lbs of copper on an annual
basis. The concentrates are expected to be trucked to one of two deep water port
sites within 25 km of the property for storage and loading onto oceangoing
vessels for shipment to a custom smelter.
Capital and Operating Costs
The total initial capital cost to advance the project to commercial production
is $110 million. This capital includes all new hoist, head frame, equipment,
mill infrastructure, ramp, upper portion of the shaft and power line and
transformers. It is anticipated that the mine/mill infrastructure will require
approximately 16-18 months to complete from the date that all necessary permits
are received and financing for the project has been completed.
The average life-of-mine operating cost per tonne of ore mined and milled is
estimated at $47.32 which equates to approximately $1.16 per lb. of copper.
In the PEA, P&E has identified a number of opportunities to potentially further
enhance the economics of the project. These include the discovery of additional
resources with further drilling at depth and along strike at Little Deer, the
discovery of additional resources at the adjoining Whalesback Mine, improvement
in metallurgical recoveries and concentrate grade, increase in mine production
rates, further reductions in capital costs through the employment of refurbished
equipment, project design optimization and the potential use of existing
underground infrastructure, including vent raises, ramp access and pre-developed
ore which exist on the Little Deer property.
Metallurgical Test Work
On October 19, 2010, excellent metallurgical results from scoping level test work on core samples from the Deposit were announced. This work, which was undertaken at SGS Lakefield Research Limited (“Lakefield”) of Lakefield, Ontario, indicates that a
clean, high grade copper concentrate grading over 28% copper with over 97% recovery and free of any deleterious elements can be produced from the Deposit. The use of a simple rougher-cleaner flowsheet, a common xanthate collector, pH control with lime and a relatively course primary grind for copper liberation from mineralization of medium hardness suggest that the operating costs should fall into the low range for any metallurgical plant constructed to treat the Little Deer mineralization (see
Highlights).
Lakefield undertook a scoping level metallurgical test program on a representative sample of copper mineralization from the Deposit grading 2.43% copper, 0.034% cobalt, 0.03 g/t Au, 19.1% iron and 5.99% sulphur accompanied by basic environmental characterization of the flotation tailings produced from the metallurgical test program.
Highlights
- Production of a saleable, high grade copper concentrate grading over 28% copper with over 97% copper recovery in locked cycle tests
- Copper concentrates free of any deleterious elements
- Copper recovered employing a simple rougher-cleaner flowsheet using a common xanthate collector
- Copper mineralization of medium hardness with Bond ball mill work index of 14.6 kilowatt hours per tonne (“kWh/t”)
- Fresh and aged tailings decant solutions well within Canadian Metal Mining Effluent Regulations (“MMER”) limits and non-lethal designations for MMER aquatic toxicology tests
Project Infrastructure
 The Deposit is located on a brownfield site and is well
situated to take advantage of Newfoundland’s developed infrastructure. The
Deposit lies approximately 16 km from the Tran-Canada Highway and is easily
accessed by a 10 km network of paved and gravel roads north of Springdale, where
there is an available skilled mining workforce. The site is approximately 8 km
from a major power substation and there is a plentiful supply of fresh water in
the area. The former tailings impoundment facility for the Whalesback Mine,
which may be able to be upgraded and used to store additional tailings,
is located only 1.2 km north of the Deposit. There is also good access
to several deep water ports for any future shipment of copper
concentrates.
The recovery of a substantial quantity of archived data, referenced earlier in
this report, has also given Thundermin and Cornerstone a better understanding of
the underground infrastructure that exists on the property. This infrastructure
dates from 1966 to 1972 and 1972 to 1974 when a portion of the upper part of the
Deposit was developed and mined by BRINEX and Green Bay Mining Company (“Green Bay”), respectively. BRINEX accessed the
Deposit from the adjoining Whalesback Mine, which is also controlled by
Thundermin and Cornerstone, and Green
Bay accessed the Deposit via a ramp. Three ventilation
raises and substantial lateral development in unmined copper mineralization are
known to exist on the property. This existing infrastructure may potentially
afford substantial cost savings for access underground for future definition
drilling and mining.
2011/2012 Program
As a result of the positive PEA, Thundermin and Cornerstone intend to
proceed with further evaluation of the Little Deer Project. This work
will include additional drilling in the adjacent Whalesback Mine area to
confirm the historical results and to possibly expand the copper
resources to the west and at depth below the areas mined previously by
BRINEX (see news release dated October 20, 2011). The discovery of
additional economic grade copper resources at relatively shallow depths
on the Whalesback property could be extremely important to an eventual
decision to place the Deposit into commercial production. In addition,
Thundermin and Cornerstone intend to undertake a substantial infill
diamond drill program on the Deposit to upgrade existing resources from
the Inferred to the Indicated Resource category prior to commencing a
pre-feasibility study on the project. Details of these programs will be
released in the coming weeks.
The Deposit and adjacent Whalesback Mine provide an excellent
opportunity to re-establish the Springdale area of north-central
Newfoundland as a significant copper producer. The general area has
proven to be very prospective for volcanogenic massive sulphide deposits
of the Cyprus type and the LDJV anticipates increased exploration
activity on its large landholdings that may lead to additional
discoveries.
QA/QC
The PEA was prepared under the supervision of Mr. Eugene J. Puritch, P.
Eng., President of P&E. Mr. Puritch is an independent Q.P. in accordance
with NI 43-101 and has reviewed and approved the contents of this
information. A NI 43-101 compliant PEA Technical Report is currently
being prepared by P&E and will be filed on SEDAR by Thundermin and
Cornerstone on or before December 15, 2011.
Mr. Andrew Hussey, P.Geo., Project Geologist and Lands Manager,
Cornerstone Resources Inc. and Q.P. has also reviewed and approved the
contents of this information.
|
|
|
