In Search of Behemoth Porphyries in British Columbia's Golden Triangle
In July 1970, a mining company called Great Plains Development Co. of Canada was in the process of drilling two exploratory holes into its “Chris” claims in northern British Columbia. These two holes would lead to a series of events that would culminate in the development of the Red Chris Mine, scheduled to begin production by May of next year.
The mine will process an astounding 30,000 tonnes of copper-gold-silver-infused rock every day for the duration of its 28-year mine life. It is expected to generate a net present value (NPV) of at least $423 million.
The circumstances of Red Chris’ acquisition were also extraordinary. After a bidding war with Taseko Mines, Imperial Mines purchased the project from bcMetals for $1.70 per share – almost triple bcMetals’ share price, one of the largest premiums in Canadian merger and acquisition history.
Unearthing Great Potential
The region in which Red Chris lies is known as the Golden Triangle. According to the B.C. Geological Survey Minfile database, more than 900 documented mineral occurrences have been identified within the Golden Triangle, of which 67 have some documented mineral resources.
The region is home to numerous porphyry copper-gold mines and advanced exploration projects collectively worth hundreds of billions of dollars. These include numerous projects similar to Red Chris such as Eskay Creek, Galore Creek and Schaft Creek.
Standouts among the many earlier stage projects are Prosper Gold’s (TSXV:PGX) Sheslay Project and neighbors Garibaldi Resources’ (TSXV:GGI) Grizzly Project, as well as Colorado Resources’ North Rok Project, and appear to share numerous characteristics with the larger porphyries in the region.
Fifteen kilometers northwest of Red Chris is Colorado Resources’ North Rok, which in April this year yielded impressive drill results: 333 meters at 0.51 percent copper and 0.67 g/t gold, starting very close to surface, with as much as 180 meters at 0.76 percent copper and 1 g/t Au starting 63 meters downhole.
The discovery at North Rok has rekindled investor interest in the region, and has also led a number of companies to re-examine historic data on their own projects in the region.
According to Prosper Gold’s co-founder, veteran geologist and British Columbia Geological Survey alumnus Dirk Tempelman-Kluit, although there is historical data available on his Sheslay project, no exploration companies have hit the area particularly hard with exploration dollars.
It wasn’t until Sheslay project was acquired by Firesteel Resources that the potential of Sheslay would finally become understood. Over the course of the ’80s, Firesteel invested $1.7 million into exploration on the Sheslay project, including sampling, trenching, geophysics, mapping, IP surveys and drilling.
Of Firesteel’s 26 holes in the Star zone, 25 fall within an area measuring about 300 meters by 300 meters. The weighted average across all 10 holes was 0.34 percent copper and 0.17 g/t gold. This compares favourably with other major alkalic porphyry deposits. For example, Schaft Creek had total resources of 1.3 billion tonnes grading 0.25 percent Cu and 0.18 g/t Au. Red Chris has reserves of 300 million tonnes grading 0.359 percent copper and 0.274 g/t.
“There were 26 holes and every hole had good numbers,” Tempelman-Kluit says. “Many holes had good numbers top to bottom. This was the kind of alteration and mineralization that you would expect to see – and want to see. Most of the time it takes hundreds of holes to define these deposits. To have these kinds of numbers at this stage of the game is pretty amazing.”
For its part, management at Garibaldi Resources, whose Grizzly Project borders the Sheslay Project, has no intention of riding the coat tails of the fast moving Prosper Gold. CEO Steve Regoci told me that although the company has been focused on its Mexican operations, including a small cash-flow positive coal project in Sonora, events at Sheslay and North Rok have prompted the company to act.
“The story in the Stikine Arch region has really happened very quickly over the last couple of months, with Colorado’s big hole and Prosper coming on the scene,” Regoci said. “The fact that the guys at Prosper have gone ahead and taken on the Sheslay project after their success at Blackwater project is really the best of both worlds for us – we get to have our cake and eat it too.”
Tempelman-Kluit and CEO Pete Bernier formed Richfield Ventures in 2005, and by 2011 had announced an initial resource estimate on the Blackwater Gold Project of 4.2 million ounces gold. Richfield was purchased by Newgold in 2011 for $550 million ($10.38 per share), making the duo and their shareholders all significantly wealthier – all in just over five years.
For their success, Tempelman-Kluit and Bernier were awarded the 2011 AME BC Award for Excellence in Prospecting and Mineral Exploration.
It took the team of Bernier and Tempelman-Kluit two years to find the Sheslay project, and option it from the cash strapped Firesteel team. Since then, Prosper’s first six drill holes at the Star Zone have delivered excellent numbers, improving on the historical results with longer intercepts and slightly better grades than average.
Rapid Expansion Potential
With mineralization starting at or very close to surface, and with mineralization open in all directions, there is a great possibility that this project will expand rapidly once drilling begins in earnest, next summer. As with all low-grade projects of this kind, the key will be low operating and capital costs and high tonnage.
For its part, Garibaldi’s Grizzly project appears to host the same type of alteration as Sheslay. An airborne geophysical study along with new IP data on both the Grizzly project and the southern part of the Sheslay project suggests that the chargeability signature found on the Sheslay project continues onto the Grizzly project.
Like Red Chris and other behemoths discovered before it, it may take some years before Sheslay, Grizzly or North Rok become mines, if they ever do at all. Deposits like these are often difficult to find because at surface they have a smaller geochemical “footprint” than other porphyries.
Both will be helped along by new infrastructure projects in the region, which historically has lagged behind other jurisdictions. In 2011, the federal government approved the Northwest Transmission Line, which will deliver cheap, reliable power – one of the single largest costs for operating mines.
For both Prosper Gold and Garibaldi Resources, one would think the end goal is to identify a sizeable resource and sell it to one of the nearby majors with experience advancing large porphyry deposits into mines: Teck, which borders Grizzly to the south, Imperial Metals, Taseko, Thompson Creek or even AuRico, all have interests in the region. There are bound to be European and Asian suitors too, hungry for more copper and gold reserves.
For most juniors, once you’re a few hundred million tonnes into exploring one of these billion-tonne-potential-deposits, a takeover is the only way to go. And as Bernier and Tempelton-Kluit learned with Richfield, and bcMetals learned with Red Chris, early success can be extremely rewarding.
About the author
Doug Hadfield is managing editor and vice president operations at resourceINTELLIGENCE.
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.