NovaCopper has released a promising preliminary economic assessment (PEA) for the Arctic polymetallic deposit projects in the Ambler mining district of northwestern Alaska. The results are very promising and suggest a production decision within 5 years with possible development next decade.
The PEA, prepared by Vancouver-based firm Tetra Tech, shows that Arctic is technically viable as a 10,000-tonne-per-day open-pit operation, annually producing 125 million lb. copper, 152 million lb. zinc, 24 million lb. lead, 29,000 oz. gold and 2.5 million oz. silver throughout its estimated 12-year life. Total capital expenditures to fully develop the project were estimated at $882 million. The study also outlined a 12-year mine life that would utilize conventional open-pit mining methods to extract roughly 10,000 tonnes per day (tpd) of mineralized ore.
While the economics appear promising, the junior says it can improve the Arctic project’s viability by conducting detailed geotechnical and hydrological drilling to characterize waste material and refine the strip ratio, which is currently 8.39 to 1. It also notes that operating costs assume the project would use diesel power, but power costs could be halved by using liquefied natural gas (LNG).
Moreover, the Alaska Industrial Development and Export Authority is looking into permitting and building an industrial access road to the Ambler mining district, including the company’s deposits in the region, which are mostly accessed by air.
According to an agreement between NovaCopper and NANA Regional Corporation, Inc., NANA has the right, following a construction decision, to elect to purchase a 16% to 25% direct interest in the project or, alternatively, to receive a 15% Net Proceeds Royalty (“NPR”). (NANA Regional Corporation, Inc. is a Regional Alaska Native corporation formed in 1971 under the Alaska Native Land Claims Settlement Act (ANCSA).
The Arctic Project will require 15 MW of peak load for 10,000 tonne-per-day operation demand. Power will be generated by five self-contained 3.6 MW prime diesel generators.
NovaCopper trades at $2.00 per share (ticker NCQ on TSX) and has a market cap of $106M.
This project has legs. NovaCopper is continuing its work to develop Alaska’s first copper mine in the next decade. Capstone’s Minto mine is Yukon in the only operating copper mine north of 56.