Idea Transcript
Report to:
TECHNICAL REPORT & FEASIBILITY STUDY for the HARPER CREEK COPPER PROJECT Near Vavenby, BC Effective Date: March 29, 2012 Prepared by: Jay Collins, P. Eng., Merit Consultants International Inc. Mark Dobbs, P. Eng., Allnorth Consultants Limited Ronald Simpson, P. Geo., GeoSim Services Inc. Kenneth Brouwer, P. Eng., Knight Piésold Ltd. John Fox, P. Eng., Laurion Consulting Inc. John Nilsson, M. Sc., P. Eng., Nilsson Mine Services Ltd.
401 – 750 West Pender Street Vancouver BC V6C 2T8
TECHNICAL REPORT AND FEASIBILITY STUDY for the
HARPER CREEK COPPER PROJECT Located near Vavenby, British Columbia Effective Date: March 29, 2012
Report to:
Prepared by:
Jay Collins, P. Eng., Merit Consultants International Inc. Mark Dobbs, P. Eng., Allnorth Consultants Limited Ronald Simpson, P. Geo., GeoSim Services Inc. Kenneth Brouwer, P. Eng., Knight Piésold Ltd. John Fox, P. Eng., Laurion Consulting Inc. John Nilsson, M. Sc., P. Eng., Nilsson Mine Services Ltd.
Suite 401, 750 West Pender Street, Vancouver, British Columbia V6C 2T8 Canada
Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
0 TABLE OF CONTENTS 1 1
2
3
EXECUTIVE SUMMARY .............................................................................................................................. 17 1.1
INTRODUCTION ............................................................................................................................................... 17
1.2
PROPERTY LOCATION & DESCRIPTION ................................................................................................................. 18
1.3
EARLY HISTORY ............................................................................................................................................... 20
1.4
GEOLOGY & DEPOSIT ....................................................................................................................................... 21
1.5
PHASE VIII EXPLORATION PROGRAM .................................................................................................................. 22
1.6
MINERAL PROCESSING AND METALLURGICAL TESTING ........................................................................................... 24
1.7
MINERAL RESOURCE & RESERVE ESTIMATE .......................................................................................................... 29
1.7.1
Resource Estimate.................................................................................................................................. 29
1.7.2
Reserve Estimate .................................................................................................................................... 30
1.8
MINING METHODS .......................................................................................................................................... 31
1.9
RECOVERY METHODS ....................................................................................................................................... 32
1.10
PROJECT INFRASTRUCTURE ................................................................................................................................ 34
1.11
MARKET STUDIES & CONTRACTS ........................................................................................................................ 35
1.12
ENVIRONMENTAL, PERMITTING, SOCIAL AND COMMUNITY IMPACT .......................................................................... 36
1.13
CAPITAL AND OPERATING COST ESTIMATE ........................................................................................................... 37
1.13.1
Initial and Sustaining Capital ............................................................................................................. 37
1.13.2
Operating Cost ................................................................................................................................... 38
1.14
PROJECT EXECUTION PLAN ................................................................................................................................ 39
1.15
ECONOMIC ANALYSIS ....................................................................................................................................... 43
1.16
CONCLUSION .................................................................................................................................................. 45
INTRODUCTION ........................................................................................................................................ 46 2.1
TERMS OF REFERENCE ...................................................................................................................................... 46
2.2
INSPECTION OF PROPERTY ................................................................................................................................. 46
2.3
SOURCES OF INFORMATION ............................................................................................................................... 47
2.4
UNITS OF MEASUREMENT ................................................................................................................................. 48
RELIANCE ON OTHER EXPERTS .................................................................................................................. 49
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 3.1 4
5
6
LIMITED DISCLAIMER OF RESPONSIBILITY ............................................................................................................. 49
PROPERTY LOCATION & DESCRIPTION ....................................................................................................... 50 4.1
PROPERTY LOCATION ....................................................................................................................................... 50
4.2
PROPERTY DESCRIPTION ................................................................................................................................... 50
4.3
ENVIRONMENTAL LIABILITES .............................................................................................................................. 55
4.4
PERMITS OBTAINED & TO BE ACQUIRED ............................................................................................................. 55
4.5
RISK FACTORS ................................................................................................................................................. 57
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, PHYSIOGRAPHY ..................................... 58 5.1
ACCESSIBILITY ................................................................................................................................................. 58
5.2
CLIMATE ........................................................................................................................................................ 58
5.3
LOCAL RESOURCES .......................................................................................................................................... 59
5.4
INFRASTRUCTURE ............................................................................................................................................ 60
5.5
PHYSIOGRAPHY ............................................................................................................................................... 60
HISTORY ................................................................................................................................................... 61 6.1
PRIOR OWNERSHIP (1966 – 2004) ................................................................................................................... 61
6.2
EXPLORATION & DEVELOPMENT BY PREVIOUS OWNERS (1967 – 1996) ................................................................... 62
6.2.1
7
6.3
HISTORICAL MINERAL RESOURCE & MINERAL RESERVE ESTIMATES .......................................................................... 65
6.4
PRODUCTION FROM PROPERTY .......................................................................................................................... 67
GEOLOGICAL SETTING & MINERALIZATION ................................................................................................ 68 7.1
Drilling By Previous Owners (1967 – 1996) ............................................................................................ 64
REGIONAL GEOLOGY ........................................................................................................................................ 68
7.1.1
Lower Cambrian to Mississippian Eagle Bay Assemblage ..................................................................... 70
7.1.2
Devonian to Permian Fennell Formation ............................................................................................... 71
7.1.3
Triassic‐Jurassic Quesnel Trough ........................................................................................................... 72
7.1.4
Mid‐Cretaceous Bayonne Plutonic Belt .................................................................................................. 72
7.2
REGIONAL MINERALIZATION .............................................................................................................................. 73
7.3
PROPERTY GEOLOGY ........................................................................................................................................ 74
7.4
GEOLOGICAL MODEL ....................................................................................................................................... 76
7.4.1
Lithological Units ................................................................................................................................... 76
7.4.2
Geological Packages .............................................................................................................................. 78
7.4.3
Structure ................................................................................................................................................ 91
7.4.4
Geological Observations ........................................................................................................................ 92
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 7.4.5 7.5
Geological Interpretation ..................................................................................................................... 106
PROPERTY MINERALIZATION ............................................................................................................................ 109
8
DEPOSIT TYPES ....................................................................................................................................... 111
9
EXPLORATION ......................................................................................................................................... 112 9.1
SURVEYS AND INVESTIGATIONS BY YMI ............................................................................................................. 112
9.1.1
Phase I Exploration .............................................................................................................................. 112
9.1.2
Phase II Exploration ............................................................................................................................. 113
9.1.3
Phase III Exploration ............................................................................................................................ 114
9.1.4
Phase IV Exploration ............................................................................................................................ 115
9.1.5
Phase V Exploration ............................................................................................................................. 116
9.1.6
Phase VI Exploration ............................................................................................................................ 117
9.1.7
Phase VII Exploration ........................................................................................................................... 118
9.2
PHASE VIII EXPLORATION ‐ CURRENT PROGRAM 2011 ........................................................................................ 120
9.2.1
Procedures and Parameters ................................................................................................................. 120
9.3
RESULTS AND INTERPRETATION ........................................................................................................................ 123
9.4
CONCLUSION ................................................................................................................................................ 123
10 DRILLING ................................................................................................................................................ 126 10.1
DIAMOND DRILLING ...................................................................................................................................... 126
10.1.1
Drill Hole Specifications ................................................................................................................... 127
10.2
DRILLING RESULTS ......................................................................................................................................... 129
10.3
CONDEMNATION DRILLING ............................................................................................................................. 131
11 SAMPLE PREPARATION, ANALYSES AND SECURITY .................................................................................. 134 11.1
CORE ANALYSIS ............................................................................................................................................ 134
11.1.1
Core Preparation ............................................................................................................................. 134
11.1.2
Core Recovery & Rock Quality Designation ..................................................................................... 134
11.1.3
Magnetic Susceptibility ................................................................................................................... 135
11.2
GEOCHEMICAL SAMPLE PREPARATION ............................................................................................................... 135
11.2.1 11.3
Analytical Laboratory Preparation .................................................................................................. 136
SAMPLE ANALYSIS ......................................................................................................................................... 136
11.3.1
Multi‐Element ICP Analyses ............................................................................................................. 137
11.3.2
Gold Analyses .................................................................................................................................. 137
11.3.3
Copper Assay ................................................................................................................................... 137
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 11.4
SECURITY ..................................................................................................................................................... 138
12 DATA VERIFICATION ............................................................................................................................... 139 12.1
CURRENT PROGRAM QUALITY ASSURANCE & QUALITY CONTROL ........................................................................... 139
12.1.1
Standards......................................................................................................................................... 139
12.1.2
Results ............................................................................................................................................. 139
12.2
CHECK ANALYSIS ........................................................................................................................................... 140
12.2.1
Batch Re‐Runs (Gold Only) ............................................................................................................... 140
12.2.2
Routine Check Analysis .................................................................................................................... 141
12.3
CONCLUSION ................................................................................................................................................ 142
13 MINERAL PROCESSING & METALLURGICAL TESTING ................................................................................ 143 13.1
INTRODUCTION ............................................................................................................................................. 143
13.1.1
Mineralization Characteristics ......................................................................................................... 144
13.1.2
Mineralogy ...................................................................................................................................... 147
13.1.3
Comminution ................................................................................................................................... 149
13.1.4
Grindability Tests ............................................................................................................................. 150
13.1.5
Flotation Tests ................................................................................................................................. 151
13.2
CONCLUSION ................................................................................................................................................ 155
14 MINERAL RESOURCE ESTIMATE ............................................................................................................... 157 14.1
EXPLORATORY DATA ANALYSIS ........................................................................................................................ 157
14.2
OUTLIER ANALYSIS ........................................................................................................................................ 162
14.4
DEPOSIT MODELING ...................................................................................................................................... 163
14.5
COMPOSITING .............................................................................................................................................. 165
14.6
DENSITY ...................................................................................................................................................... 165
14.7
VARIOGRAM ANALYSIS ................................................................................................................................... 166
14.8
BLOCK MODEL AND GRADE ESTIMATION PROCEDURES ......................................................................................... 168
14.9
MINERAL RESOURCE CLASSIFICATION ................................................................................................................ 176
14.9.1
Lerchs‐Grossman Pit ........................................................................................................................ 176
14.10
MODEL VALIDATION .................................................................................................................................. 178
14.11
MINERAL RESOURCE SUMMARY .................................................................................................................. 182
15 MINERAL RESERVE ESTIMATE .................................................................................................................. 183 15.1
OPEN PIT OPTIMIZATION ................................................................................................................................ 183
15.1.1
Introduction ..................................................................................................................................... 183
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 15.1.2
Economic Parameters Applied to Mine Design ................................................................................ 183
15.1.3
Metallurgical Parameters ................................................................................................................ 187
15.1.4
Block Model ..................................................................................................................................... 189
15.1.5
Wall Slope Design ............................................................................................................................ 190
15.1.6
Pit Limit Analysis .............................................................................................................................. 190
15.2
PIT DESIGN .................................................................................................................................................. 193
15.3
RESERVES .................................................................................................................................................... 194
15.4
RECOMMENDATIONS ..................................................................................................................................... 196
16 MINING METHODS .................................................................................................................................. 197 16.1
16.1.1
Resources and Mineable Reserves ................................................................................................... 198
16.1.2
Open Pit Mine Plan .......................................................................................................................... 199
16.1.3
Waste Storage and Stockpile Plan ................................................................................................... 201
16.1.4
Mining Equipment ........................................................................................................................... 201
16.2
General ............................................................................................................................................ 203
16.2.2
Wall Slope Design Sectors................................................................................................................ 203
GENERAL DESIGN .......................................................................................................................................... 210
16.3.1
Design Summary .............................................................................................................................. 210
16.3.2
Material Types ................................................................................................................................. 210
16.3.3
Waste and Low Grade Storage ........................................................................................................ 211
16.3.4
Haulage Roads ................................................................................................................................. 212
16.4
MINE PRODUCTION SCHEDULE ........................................................................................................................ 213
16.4.1
Summary ......................................................................................................................................... 213
16.4.2
Cut‐off Grade Selection .................................................................................................................... 213
16.4.3
Pit Sequencing ................................................................................................................................. 214
16.4.4
Mine Development and Access ........................................................................................................ 216
16.4.5
Production Forecast ......................................................................................................................... 221
16.4.6
Mine Development .......................................................................................................................... 224
16.5
OPEN PIT DESIGN ......................................................................................................................................... 203
16.2.1
16.3
PROJECT DESCRIPTION ................................................................................................................................... 197
MINE EQUIPMENT ......................................................................................................................................... 230
16.5.1
Summary ......................................................................................................................................... 230
16.5.2
Major Mine Equipment Operating Parameters ............................................................................... 231
16.5.3
Drilling and Blasting ........................................................................................................................ 231
16.5.4
Loading ............................................................................................................................................ 232
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 16.5.5
Haulage ........................................................................................................................................... 232
16.5.6
Mine Support ................................................................................................................................... 232
16.6
MINE ANCILLARY FACILITIES ............................................................................................................................ 233
16.6.1
Mine Maintenance Shop .................................................................................................................. 233
16.6.2
Mine Electrical Power ...................................................................................................................... 234
16.6.3
Mine Dispatch .................................................................................................................................. 234
16.6.4
Mine Water Management ............................................................................................................... 234
16.6.5
Fuel Storage ..................................................................................................................................... 234
16.7
MINE STAFF AND HOURLY EMPLOYEES .............................................................................................................. 235
17 RECOVERY METHODS .............................................................................................................................. 238 17.1
PROCESS PLANT ............................................................................................................................................ 238
17.2
PLANT DESIGN & EQUIPMENT ......................................................................................................................... 239
17.2.1
Major Design Criteria ...................................................................................................................... 241
17.2.2
Primary Crushing ............................................................................................................................. 242
17.2.3
Stockpile and Reclaim ...................................................................................................................... 242
17.2.4
Primary Grinding and Classification ................................................................................................ 244
17.2.5
Flotation and Regrinding Circuits .................................................................................................... 245
17.2.6
Cleaner Flotation Circuit .................................................................................................................. 248
17.2.7
Concentrate Dewatering and Handling ........................................................................................... 249
17.2.8
Tailings ............................................................................................................................................ 249
17.2.9
Reagent Handling and Storage ........................................................................................................ 249
17.2.10
Assay and Metallurgical Laboratory ................................................................................................ 251
17.2.11
Water Supply ................................................................................................................................... 251
17.2.12
Processing Equipment ..................................................................................................................... 253
17.3
ENERGY, WATER AND PROCESS MATERIALS ....................................................................................................... 281
17.3.1 17.4
Energy Load ..................................................................................................................................... 281
INSTRUMENTATION & CONTROL SYSTEM ........................................................................................................... 282
17.4.1
Control System ................................................................................................................................. 282
18 PROJECT INFRASTRUCTURE ..................................................................................................................... 283 18.1
OVERVIEW ................................................................................................................................................... 283
18.2
SITE ACCESS ROAD ........................................................................................................................................ 284
18.2.1 18.3
Access Road Selection ...................................................................................................................... 286
RAIL ........................................................................................................................................................... 287
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 18.3.1 18.4
Rail Requirements & Assessment .................................................................................................... 288
POWER SUPPLY ............................................................................................................................................ 291
18.4.1
Main Substation .............................................................................................................................. 291
18.4.2
Site Power Distribution .................................................................................................................... 291
18.4.3
Emergency Power Distribution ........................................................................................................ 291
18.4.4
Onsite Power Lines .......................................................................................................................... 291
18.5
PLANT SITE FACILITIES .................................................................................................................................... 292
18.5.1
Mill Building and Concentrate Load‐out .......................................................................................... 292
18.5.2
Primary Crusher ............................................................................................................................... 295
18.5.3
Assay Laboratory ............................................................................................................................. 296
18.5.4
Mine Maintenance Shop and Mine Dry ........................................................................................... 296
18.5.5
Ancillary Buildings and Other Structures ......................................................................................... 297
18.5.6
Fuel Storage ..................................................................................................................................... 297
18.5.7
Construction Camp .......................................................................................................................... 298
18.5.8
Offsite Load Out & Administration .................................................................................................. 298
18.6
PIPELINES .................................................................................................................................................... 299
18.6.1
Tailings Distribution Pipelines .......................................................................................................... 300
18.6.2
Reclaim Water Pipeline ................................................................................................................... 301
18.6.3
Pit Dewatering Pipeline ................................................................................................................... 301
18.6.4
Water Management Pipelines ......................................................................................................... 302
19 MARKET STUDIES AND CONTRACTS ........................................................................................................ 303 20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT .................................... 307
20.1
ENVIRONMENTAL STUDIES .............................................................................................................................. 307
20.2
WASTE STOCKPILES, TAILINGS AND WATER MANAGEMENT ................................................................................... 309
20.2.1
Introduction ..................................................................................................................................... 309
20.2.2
Tailings Management Facility Design .............................................................................................. 310
20.2.3
PAG Waste Stockpile ....................................................................................................................... 318
20.2.4
Site Wide Water Management ........................................................................................................ 319
20.3
PROJECT PERMITTING REQUIREMENTS .............................................................................................................. 322
20.4
SOCIAL AND COMMUNITY RELATIONS ............................................................................................................... 322
20.4.1
Environmental Assessment Review Process .................................................................................... 322
20.4.2
Social and Community Requirements .............................................................................................. 324
20.4.3
First Nations .................................................................................................................................... 324
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 20.5
MINE CLOSURE AND RECLAMATION .................................................................................................................. 325
21 CAPITAL & OPERATING COST ESTIMATE .................................................................................................. 328 21.1
INITIAL & SUSTAINING CAPITAL ........................................................................................................................ 328
21.1.1
Summary ......................................................................................................................................... 329
21.1.2
Basis of Estimate ............................................................................................................................. 331
21.1.3
Pricing .............................................................................................................................................. 334
21.1.4
Taxes ................................................................................................................................................ 334
21.1.5
Currency, Estimate Base Date & Foreign Exchange ......................................................................... 334
21.1.6
Accuracy .......................................................................................................................................... 335
21.1.7
Project Implementation Plan ........................................................................................................... 335
21.1.8
Exclusions ........................................................................................................................................ 335
21.1.9
Project Direct Costs .......................................................................................................................... 336
21.1.10
Project Indirect Costs ....................................................................................................................... 340
21.1.11
Owner’s Cost .................................................................................................................................... 343
21.1.12
Contingency ..................................................................................................................................... 343
21.1.13
Escalation ........................................................................................................................................ 345
21.1.14
Sustaining Capital ............................................................................................................................ 345
21.2
OPERATING COST ESTIMATE ............................................................................................................................ 347
21.2.1
Methodology ................................................................................................................................... 348
21.2.2
Operating Cost Summary ................................................................................................................ 349
21.2.3
Mining Operating Costs ................................................................................................................... 350
21.2.4
Process Operating Costs .................................................................................................................. 355
21.2.5
G&A and Site Services Operating Cost ............................................................................................. 359
22 ECONOMIC ANALYSIS .............................................................................................................................. 364
22.1
VALUATION METHODOLOGY ........................................................................................................................... 364
22.2
FINANCIAL MODEL PARAMETERS...................................................................................................................... 364
22.2.1
Ore Reserves and Mine Life ............................................................................................................. 364
22.2.2
Metallurgical Balance ...................................................................................................................... 365
22.2.3
Smelter Terms .................................................................................................................................. 365
22.2.4
Concentrate Transportation Costs ................................................................................................... 365
22.2.5
Markets ........................................................................................................................................... 366
22.2.6
Exchange Rate ................................................................................................................................. 366
22.2.7
Operating Costs ............................................................................................................................... 367
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 22.2.8
Capital Costs .................................................................................................................................... 368
22.2.9
Royalties .......................................................................................................................................... 368
22.2.10
Taxes ................................................................................................................................................ 368
22.2.11
Financing ......................................................................................................................................... 369
22.2.12
Inflation ........................................................................................................................................... 369
22.2.13
Discounting and Date of Valuation.................................................................................................. 369
22.3
SUMMARY OF BASE CASE INPUT PARAMETERS AND RESULTS ................................................................................. 373
22.3.1
Proven and Probable Reserves ........................................................................................................ 373
22.3.2
Production Rate and Mine Life ........................................................................................................ 373
22.3.3
Year 1‐5 ........................................................................................................................................... 373
22.3.4
Concentrate and Metal Production (LOM) ...................................................................................... 373
22.3.5
Capital Cost ...................................................................................................................................... 374
22.3.6
LOM Operating Cost ........................................................................................................................ 374
22.3.7
Metal Prices (US$) ........................................................................................................................... 374
22.3.8
Average Operating Margin ($/t ore)@ $2.50/lb Cu ........................................................................ 374
22.3.9
Operating Margin (US $ Million) ..................................................................................................... 375
22.3.10
Pre‐Tax Rate of Return and Payback ............................................................................................... 375
22.3.11
Pre‐Tax Net Present Value (US $ Million) ........................................................................................ 375
22.4
SENSITIVITY ANALYSIS .................................................................................................................................... 375
23 ADJACENT PROPERTIES ........................................................................................................................... 378 24 OTHER RELEVANT DATA AND INFORMATION .......................................................................................... 379 24.1
PROJECT EXECUTION PLAN .............................................................................................................................. 379
24.1.1
Plan Objective .................................................................................................................................. 379
24.1.2
Plan Execution Strategy ................................................................................................................... 380
24.1.3
Management Approach................................................................................................................... 388
24.1.4
Engineering ...................................................................................................................................... 396
24.1.5
Constructability Reviews .................................................................................................................. 399
24.1.6
Procurement .................................................................................................................................... 400
24.1.7
Construction Management .............................................................................................................. 400
24.1.8
Contracts ......................................................................................................................................... 402
24.1.9
Cost Management ........................................................................................................................... 403
24.2
PROJECT SCHEDULE ....................................................................................................................................... 405
24.2.1
General ............................................................................................................................................ 405
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 24.2.2 24.3
Project Milestones ........................................................................................................................... 407
QUALITY CONTROL & QUALITY ASSURANCE ....................................................................................................... 408
24.3.1
Manufactured Items ........................................................................................................................ 408
24.3.2
Construction .................................................................................................................................... 408
24.3.3
Risk Management ............................................................................................................................ 408
24.3.4
Health, Safety, Environment ............................................................................................................ 409
24.3.5
Communications & Reports ............................................................................................................. 411
24.3.6
Temporary & Site Facilities .............................................................................................................. 412
24.3.7
Security ............................................................................................................................................ 414
24.3.8
Commissioning ................................................................................................................................ 414
24.3.9
Project Completion .......................................................................................................................... 416
25 INTERPRETATION AND CONCLUSIONS ..................................................................................................... 418 26 RECOMMENDATIONS.............................................................................................................................. 419 27 REFERENCES ........................................................................................................................................... 420 28 SIGNATURE PAGE & CERTIFICATES .......................................................................................................... 425 29 APPENDICES ........................................................................................................................................... 432 29.1
APPENDIX A ................................................................................................................................................. 432
29.1.1 29.2
APPENDIX B ................................................................................................................................................. 433
29.2.1 29.3
Engineering & Design ...................................................................................................................... 434
APPENDIX D ................................................................................................................................................. 435
29.4.1 29.5
Project Schedule .............................................................................................................................. 433
APPENDIX C ................................................................................................................................................. 434
29.3.1 29.4
Capital & Operating Cost Estimates ................................................................................................ 432
Geotechnical & Geochemical Reports ............................................................................................. 435
APPENDIX E ................................................................................................................................................. 436
29.5.1
Metallurgical Reports ...................................................................................................................... 436
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
FIGURES & TABLES FIGURE 1‐1: PROPERTY LOCATION ....................................................................................................................................... 19 FIGURE 1‐2: SITE LOCATION ............................................................................................................................................... 20 FIGURE 1‐3: PHASE VIII DRILL HOLE LAYOUT (CME 2012) ..................................................................................................... 23 FIGURE 1‐4: SIMPLIFIED FS FLOWSHEET ............................................................................................................................... 27 FIGURE 1‐5: PLANT SITE LAYOUT ......................................................................................................................................... 32 FIGURE 1‐6: LOCATION RAIL LOAD OUT FACILITY ................................................................................................................... 34 FIGURE 1‐7: GENERAL ARRANGEMENT ................................................................................................................................. 35 FIGURE 1‐8: NPV 8% SENSITIVITY ...................................................................................................................................... 44 FIGURE 4‐1: PROPERTY LOCATION (LATITUDE 51O33' N, LONGITUDE 119O42' W) ....................................................................... 51 FIGURE 4‐2: HARPER CREEK CLAIMS AREA ............................................................................................................................ 52 FIGURE 7‐1: REGIONAL GEOLOGY & ECONOMIC SETTING ........................................................................................................ 69 FIGURE 7‐2: SIMPLIFIED PROPERTY GEOLOGY ........................................................................................................................ 75 FIGURE 7‐3: GEOLOGY PLAN MAP ....................................................................................................................................... 88 FIGURE 7‐4: CROSS SECTION WEST DOMAIN ......................................................................................................................... 89 FIGURE 7‐5: CROSS SECTION EAST DOMAIN .......................................................................................................................... 90 FIGURE 7‐6: SCHEMATIC CROSS‐SECTION GEOLOGICAL EVOLUTION ......................................................................................... 108 FIGURE 9‐1: RELOGGED YMI DRILL HOLES .......................................................................................................................... 121 FIGURE 10‐1: PHASE VIII DRILL HOLES (CME 2012) ........................................................................................................... 128 FIGURE 13‐1: METALLURGICAL TEST HOLE LOCATIONS ......................................................................................................... 144 FIGURE 13‐2: MINERAL CONTENT OF THE VARIABILITY COMPOSITES ........................................................................................ 148 FIGURE 13‐3: CU DEPORTMENT BY MINERAL SPECIES OF THE VARIABILITY COMPOSITES .............................................................. 148 FIGURE 13‐4: CU SULPHIDES DISTRIBUTION BY CLASS OF THE VARIABILITY COMPOSITES .............................................................. 149 FIGURE 14‐1: FREQUENCY DISTRIBUTION OF CU .................................................................................................................. 159 FIGURE 14‐2: FREQUENCY DISTRIBUTION OF AU .................................................................................................................. 159 FIGURE 14‐3: FREQUENCY DISTRIBUTION OF AG .................................................................................................................. 160 FIGURE 14‐4: SCATTERPLOT OF CU VS AU AND AG SAMPLE DATA ........................................................................................... 160 FIGURE 14‐5: SCATTERPLOT OF AU VS AG SAMPLE DATA ....................................................................................................... 161 FIGURE 14‐6: BLOCK MODEL LITHOLOGY ........................................................................................................................... 163 FIGURE 14‐7: GRADESHELL CONSTRAINTS ........................................................................................................................... 164 FIGURE 14‐8: FREQUENCY DISTRIBUTION OF CU GRADES IN BLOCK MODEL .............................................................................. 169 FIGURE 14‐9: FREQUENCY DISTRIBUTION OF AU GRADES IN BLOCK MODEL .............................................................................. 169 FIGURE 14‐10: PLAN VIEW OF ESTIMATED CU GRADES ......................................................................................................... 170
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 FIGURE 14‐11: PLAN VIEW OF ESTIMATED AU GRADES ......................................................................................................... 171 FIGURE 14‐12: CU BLOCK GRADE DISTRIBUTION – SECTION 304122E .................................................................................... 172 FIGURE 14‐13: CU BLOCK GRADE DISTRIBUTION – SECTION 305034E .................................................................................... 172 FIGURE 14‐14: CU BLOCK GRADE DISTRIBUTION – SECTION 305620E .................................................................................... 173 FIGURE 14‐15: CU BLOCK GRADE DISTRIBUTION – SECTION 5711528N ................................................................................. 173 FIGURE 14‐16: PERSPECTIVE VIEW OF BLOCK MODEL CU GRADES .......................................................................................... 174 FIGURE 14‐17: PERSPECTIVE VIEW OF BLOCK MODEL AU GRADES .......................................................................................... 175 FIGURE 14‐18: BLOCK CLASSIFICATION ‐ PLAN VIEW............................................................................................................ 177 FIGURE 14‐19: CU SWATH PLOT (E‐W) AT 5711516‐571156 NORTH ................................................................................ 179 FIGURE 14‐20: AU SWATH PLOT (N‐S) AT 5711516‐571156 NORTH ................................................................................. 180 FIGURE 14‐21: AG SWATH PLOT (N‐S) AT 5711516‐571156 NORTH ................................................................................. 181 FIGURE 15‐1: COPPER RECOVERY ...................................................................................................................................... 187 FIGURE 15‐2: GOLD RECOVERY ........................................................................................................................................ 188 FIGURE 15‐3: SILVER RECOVERY ....................................................................................................................................... 188 FIGURE 15‐4: CROSS SECTION NSR LERCHS GROSSMAN PIT LIMITS ........................................................................................ 191 FIGURE 15‐5: BENCH PLAN NSR LERCH GROSSMAN PIT LIMITS .............................................................................................. 191 FIGURE 15‐6: FINAL PIT LIMITS ........................................................................................................................................ 193 FIGURE 15‐7: MINE DEVELOPMENT PHASES ‐ SOLIDS ........................................................................................................... 194 FIGURE 15‐8: RESOURCE DISTRIBUTION ‐ PIT LIMITS ............................................................................................................ 196 FIGURE 16‐1: PIT DESIGN SECTOR LOCATION ..................................................................................................................... 208 FIGURE 16‐2: WASTE DUMP AND STOCKPILE LOCATIONS ...................................................................................................... 212 FIGURE 16‐3: PIT PHASE SOLIDS ...................................................................................................................................... 214 FIGURE 16‐4: PIT PHASES AND NSR BENCH PLAN 1540 ...................................................................................................... 215 FIGURE 16‐5: PHASE 1 PIT DESIGN ................................................................................................................................... 216 FIGURE 16‐6: PHASE 2 PIT DESIGN ................................................................................................................................... 217 FIGURE 16‐7: PHASE 3 DESIGN ........................................................................................................................................ 218 FIGURE 16‐8: PHASE 4 PIT DESIGN ................................................................................................................................... 219 FIGURE 16‐9: PHASE 5 ................................................................................................................................................... 220 FIGURE 16‐10: MATERIAL MOVEMENT SCHEDULE .............................................................................................................. 223 FIGURE 16‐11: HEAD GRADES ......................................................................................................................................... 223 FIGURE 16‐12: PRE‐PRODUCTION MINE DEVELOPMENT ...................................................................................................... 224 FIGURE 16‐13: YEAR 1 DEVELOPMENT .............................................................................................................................. 225 FIGURE 16‐14: YEAR 3 DEVELOPMENT .............................................................................................................................. 226 FIGURE 16‐15: YEAR 5 DEVELOPMENT .............................................................................................................................. 227
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Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 FIGURE 16‐16: YEAR 8 DEVELOPMENT .............................................................................................................................. 228 FIGURE 16‐17: YEAR 12 DEVELOPMENT ............................................................................................................................ 229 FIGURE 16‐18: YEAR 23 DEVELOPMENT ‐ FINAL PIT ............................................................................................................ 230 FIGURE 16‐19: MANPOWER DISTRIBUTION ........................................................................................................................ 237 FIGURE 17‐1: SIMPLIFIED FS FLOWSHEET ........................................................................................................................... 240 FIGURE 17‐2: STOCKPILE AND SAG FEED CONVEYOR ............................................................................................................ 243 FIGURE 17‐3: GRINDING AREA LAYOUT .............................................................................................................................. 244 FIGURE 17‐4: ROUGHER FLOTATION LAYOUT ...................................................................................................................... 246 FIGURE 17‐5: REGRIND AREA LAYOUT ............................................................................................................................... 247 FIGURE 17‐6: CLEANER FLOTATION AREA LAYOUT ................................................................................................................ 248 FIGURE 18‐1: SITE LAYOUT .............................................................................................................................................. 284 FIGURE 18‐2: SITE ACCESS ROAD ...................................................................................................................................... 286 FIGURE 18‐3: LOCATION RAIL LOAD OUT FACILITY ............................................................................................................... 287 FIGURE 18‐4: RAIL SIDING WEST TO OLD MILL BUILDING ...................................................................................................... 290 FIGURE 18‐5: RAIL SIDING EAST TO MAIN CN LINE .............................................................................................................. 290 FIGURE 18‐6: PLANT SITE FACILITIES .................................................................................................................................. 292 FIGURE 18‐7: GRINDING / CONCENTRATE PLANT LAYOUT ...................................................................................................... 294 FIGURE 18‐8: PRIMARY CRUSHER CROSS SECTION ................................................................................................................ 295 FIGURE 18‐9: MINE MAINTENANCE SHOP & MINE DRY BUILDING LAYOUT .............................................................................. 297 FIGURE 18‐10: RAIL LOAD OUT LAYOUT ............................................................................................................................. 299 FIGURE 20‐1: GENERAL ARRANGEMENT ............................................................................................................................. 309 FIGURE 20‐2: DRAWING C0002 ‐ TMF STAGE 1A SITE PLAN ................................................................................................ 312 FIGURE 20‐3: DRAWING C0006 ‐ TMF STAGE 1A TYPICAL SECTION ....................................................................................... 313 FIGURE 20‐4: DRAWING C0004 ‐ TMF ULTIMATE STAGE SITE PLAN ...................................................................................... 315 FIGURE 20‐5: DRAWING C0008 ‐ TMF SUSTAINING EMBANKMENT TYPICAL SECTION ............................................................... 316 FIGURE 20‐6: TMF FILLING ARRANGEMENT ....................................................................................................................... 318 FIGURE 20‐7: SITE WIDE WATER MANAGEMENT PLAN ......................................................................................................... 321 FIGURE 20‐8: CLOSURE PLAN ........................................................................................................................................... 326 FIGURE 22‐1: HISTORICAL COPPER PRICE VS US:CDN DOLLAR FX RATE .................................................................................. 367 FIGURE 22‐2: IRR SENSITIVITY.......................................................................................................................................... 376 FIGURE 22‐3: NPV 5% SENSITIVITY .................................................................................................................................. 376 FIGURE 22‐4: NPV 8% SENSITIVITY .................................................................................................................................. 377 FIGURE 24‐1: PROJECT ORGANIZATION .............................................................................................................................. 389 FIGURE 24‐2: PROJECT SCHEDULE ..................................................................................................................................... 406
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
TABLE 1‐1: FS METALLURGICAL RESULTS SUMMARY ............................................................................................................... 26 TABLE 1‐2: MINERAL RESOURCE SUMMARY (GEOSIM, DECEMBER 2011) .................................................................................. 30 TABLE 1‐3: MINEABLE RESERVES (NILSSON – FEBRUARY 2012) ............................................................................................... 31 TABLE 1‐4: CAPITAL COST ESTIMATE SUMMARY ..................................................................................................................... 37 TABLE 1‐5: SUSTAINING CAPITAL SUMMARY ......................................................................................................................... 38 TABLE 1‐6: OPERATING COST ESTIMATE ............................................................................................................................... 39 TABLE 1‐7: KEY PROJECT MILESTONES ................................................................................................................................. 42 TABLE 1‐8: SENSITIVITY ANALYSIS ........................................................................................................................................ 44 TABLE 2‐1: SOURCES OF INFORMATION ................................................................................................................................ 47 TABLE 2‐2: UNITS OF MEASURE .......................................................................................................................................... 48 TABLE 4‐1: HARPER CREEK MINERAL CLAIMS ........................................................................................................................ 53 TABLE 4‐2: MAJOR PERMIT APPROVALS ............................................................................................................................... 55 TABLE 5‐1: SITE METEOROLOGICAL DATA ............................................................................................................................. 59 TABLE 6‐1: RESOURCE & RESERVE ESTIMATE PBK (1988)1 ..................................................................................................... 65 TABLE 6‐2: RENNIE & SCOTT 2007 / RENNIE, WRIT.COMM. 2008 .......................................................................................... 66 TABLE 6‐3: RESOURCE ESTIMATE (AFTER RENNIE & SCOTT, 2010) ............................................................................................ 66 TABLE 6‐4: MINERAL RESOURCE ESTIMATE (WARDROP PEA APRIL 1, 2011) ............................................................................. 67 TABLE 7‐1: STRUCTURAL HISTORY OF DEPOSIT (AFTER SCHIARIZZA & PRETO 1987) ..................................................................... 70 TABLE 7‐2: GEOLOGICAL LEGEND ........................................................................................................................................ 76 TABLE 7‐3: OVERVIEW OF ROCK PACKAGES ........................................................................................................................... 79 TABLE 9‐1: HISTORICAL CORE RESAMPLING SUMMARY ......................................................................................................... 122 TABLE 10‐1: DRILL HOLE SPECIFICATIONS (CME 2012) ........................................................................................................ 127 TABLE 10‐2: SELECTED SIGNIFICANT INTERSECTIONS (CME 2012) .......................................................................................... 129 TABLE 10‐3: CONDEMNATION DRILL HOLE LOCATIONS ......................................................................................................... 132 TABLE 10‐4: SUMMARY OF COPPER INTERSECTIONS >1M ...................................................................................................... 132 TABLE 12‐1: STANDARD REFERENCE MATERIAL (SRM) ......................................................................................................... 139 TABLE 13‐1: LITHOLOGICAL BREAKDOWN OF THE HARPER CREEK DEPOSIT ................................................................................ 145 TABLE 13‐2: MET GRADE LITHOLOGY COMPOSITES .............................................................................................................. 146 TABLE 13‐3: FLS COMMINUTION RESULTS 2011 (1000KG/T) ............................................................................................... 149 TABLE 13‐4: CORE SAMPLES TEST SUMMARY ...................................................................................................................... 151 TABLE 13‐5: FINAL CONCENTRATE ANALYSIS ‐ MINOR ELEMENTS ........................................................................................... 154 TABLE 14‐1: RESOURCE DRILL HOLE SUMMARY ................................................................................................................... 157
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 TABLE 15‐1: NET SMELTER RETURN .................................................................................................................................. 185 TABLE 15‐2: PIT OPTIMIZATION PARAMETERS ..................................................................................................................... 186 TABLE 15‐3: BLOCK MODEL LIMITS .................................................................................................................................. 189 TABLE 15‐4: LERCHS GROSSMAN IN‐PIT RESOURCES ............................................................................................................ 192 TABLE 15‐5: INCREMENTAL IN‐PIT RESOURCES ................................................................................................................... 192 TABLE 15‐6: MINEABLE RESERVES .................................................................................................................................... 195 TABLE 16‐1: PROVEN & PROBABLE RESERVES ..................................................................................................................... 198 TABLE 16‐2: SUMMARY PRODUCTION SCHEDULE ................................................................................................................. 200 TABLE 16‐3: MINE EQUIPMENT FLEET ............................................................................................................................... 202 TABLE 16‐4: SLOPE DESIGN SECTORS ................................................................................................................................ 210 TABLE 16‐5: MINE PRODUCTION FORECAST ........................................................................................................................ 222 TABLE 16‐6: MINE STAFF AND HOURLY EMPLOYEES ............................................................................................................ 236 TABLE 17‐1: MAJOR DESIGN CRITERIA ............................................................................................................................... 241 TABLE 17‐2: FS EQUIPMENT LIST ...................................................................................................................................... 253 TABLE 17‐3: ENERGY REQUIREMENTS BY AREA .................................................................................................................... 281 TABLE 19‐1: CONCENTRATE QUANTITY & QUALITY CHARACTERISTICS ...................................................................................... 305 TABLE 20‐1: STAGE 1 EMBANKMENT VOLUMES ................................................................................................................... 314 TABLE 20‐2: SUSTAINING EMBANKMENT VOLUMES .............................................................................................................. 317 TABLE 21‐1: CAPITAL COST SUMMARY ............................................................................................................................... 330 TABLE 21‐2: FOREIGN CURRENCY FX RATE ......................................................................................................................... 335 TABLE 21‐3: CONTINGENCY RATES BY CATEGORY ................................................................................................................. 344 TABLE 21‐4: SUSTAINING CAPITAL SUMMARY ..................................................................................................................... 346 TABLE 21‐5: KEY COMMODITY PRICES ............................................................................................................................... 348 TABLE 21‐6: PAYROLL BURDEN ......................................................................................................................................... 349 TABLE 21‐7: OPERATING COST ESTIMATE ........................................................................................................................... 350 TABLE 21‐8: MINE MANPOWER REQUIREMENTS ................................................................................................................. 352 TABLE 21‐9: MINE OPERATING COST SUMMARY ................................................................................................................. 353 TABLE 21‐10: ROCKFILL REQUIREMENTS ............................................................................................................................ 354 TABLE 21‐11: PROCESS OPERATING COST SUMMARY ........................................................................................................... 355 TABLE 21‐12: PROCESS PLANT MANPOWER REQUIREMENTS ................................................................................................. 356 TABLE 21‐13: ESTIMATED POWER REQUIREMENTS............................................................................................................... 357 TABLE 21‐14: PROCESS PLANT OPERATING SUPPLIES ............................................................................................................ 358 TABLE 21‐15: MAINTENANCE SUPPLIES ............................................................................................................................. 358 TABLE 21‐16: G&A OPERATING COSTS ............................................................................................................................. 360
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 TABLE 21‐17: G&A MANPOWER REQUIREMENTS ............................................................................................................... 361 TABLE 21‐18: SITE SERVICES OPERATING COSTS .................................................................................................................. 362 TABLE 21‐19: SITE SERVICES MANPOWER REQUIREMENTS .................................................................................................... 362 TABLE 21‐20: SITE SERVICES POWER REQUIREMENTS ........................................................................................................... 363 TABLE 22‐1: HARPER CREEK CASH FLOW PROJECTION YEAR ‐2 TO 10 ..................................................................................... 370 TABLE 22‐2: HARPER CREEK CASH FLOW PROJECTION YEAR 11 ‐ 22 ....................................................................................... 371 TABLE 22‐3: HARPER CREEK CASH FLOW PROJECTION YEAR 22‐30 ......................................................................................... 372 TABLE 24‐1: RESPONSIBILITY MATRIX ................................................................................................................................ 391 TABLE 24‐2: DESIGN / SUPPLY PACKAGES ........................................................................................................................... 397 TABLE 24‐3: MAJOR CONTRACT SUMMARY ........................................................................................................................ 403 TABLE 24‐4: KEY PROJECT MILESTONES ............................................................................................................................. 407
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
1 EXECUTIVE SUMMARY 1.1
Introduction
An independent Technical Report and Preliminary Assessment (PEA) for the Harper Creek Project (the Project) was completed by Wardrop Engineering Inc., a Tetra Tech Company (Wardrop) on March 31, 2011 and filed on SEDAR April 1, 2011. The report concluded that the Project offered exceptional potential as one of the largest undeveloped copper projects in Canada and recommended that Yellowhead Mining Inc. (YMI) should proceed to feasibility study. YMI subsequently commissioned a specialist team, managed and led by Merit Consultants International Inc. (Merit), to undertake a Feasibility Study (FS) for the Project. Merit and the following consultants and associated Qualified Persons completed the component studies for the National Instrument 43‐101 (NI 43‐101) compliant FS: A. Jay Collins, P.Eng.
Merit Consultants International Inc. (Merit)
Mark Dobbs, P. Eng.
Allnorth Consultants Ltd. (Allnorth)
Ronald Simpson, P. Geo.
GeoSim Services Inc. (GeoSim)
Kenneth Brouwer, P.Eng.
Knight Piésold Ltd. (KP)
John Fox, P. Eng.
Laurion Consulting Inc. (Laurion)
John Nilsson, P. Eng.
Nilsson Mine Services Ltd. (Nilsson)
All Qualified Persons, as named above, visited the Project site on July 11 and 12, 2011 and were supported further by sub‐consultants, vendors and contractors. The tour of the property included area inspections of the proposed plant site, crusher, borrow, tailings dam, access roads, Vavenby Bridge, Birch Island Bridge, BC Hydro power line, CN rail spur line and the neighboring Canfor and Weyerhaeuser facilities. YMI provided complete access to all areas of the Harper Creek Property (the Property) relevant to the FS. The FS Team was supported by others as referenced in Section 2, Table 2‐1.
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
In addition, during the course of the FS, independent visits were made by the FS qualified persons to further the study of viable infrastructure options including the main access road, Vavenby load‐out and administrative facilities and the proposed high voltage power line route. All costs are in Canadian dollars (CDN) and units are in metric, unless otherwise specified. 1.2
Property Location & Description
The Property covers a total of 42,636.48 hectares and is located in the Thompson‐Nicola area of British Columbia approximately 150km north‐east of Kamloops near Vavenby, British Columbia (Reference Figure 1‐1). Road access to the western part of the Property is from Vavenby; via Yellowhead #5, across the North Thompson River and westward along the Birch Island‐Lost Creek Forestry Service Road (FSR) east to the Jones Creek FSR. Access to the east side and central part of the Property is from Vavenby via the Vavenby Mountain FSR and the Barriere Mountain and Saskum Plateau FSRs. The Yellowhead #5 Highway, the CNR transcontinental main line and the main BC Hydro 138kVa transmission line are 10km due north of the Project area. There are no services or utilities currently running to the site location (Reference: Figure 1‐2) other than forestry and exploration access roads.
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 Figure 1‐1: Property Location
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012 Figure 1‐2: Site Location
The Property is located within the Shuswap Highlands and consists of gently sloping plateau areas underlain by foliated metamorphic rocks dissected by the Clearwater, North Thompson, Adams and Shuswap Rivers. Site topography is steep to moderate with approximate highs of 1,850m and lows of ~450m at Vavenby. Deeply incised local streams frequently follow courses along fault lines. Forest cover consists of thick coniferous trees with heavy underbrush to wide open clear cuts. Small marshy alpine meadows occur at higher elevations. The climate is typical of the BC central interior. The winter season runs from late October to late March. Site climatic conditions are dependent on location and elevation. Temperatures in Vavenby range from a high of +26oC in August to a low of ‐10oC in January. The estimated annual precipitation is 1050mm, with approximately 60% falling as snow. 1.3
Early History
In 1966 separate prospecting and stream sediment sampling campaigns by Noranda Exploration and Quebec Cartier (a subsidiary of US Steel) discovered copper mineralization on the Property at the
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
headwaters of Baker Creek and a tributary of Harper Creek. The two companies worked independently from 1967 until mid‐1970 at which time they began a joint exploration program that continued to 1974. Drilling on the main deposit totaled 25,806m in 161 holes. In 1996, American Comstock purchased the Noranda claims and acquired an option on the Quebec Cartier claims (held by Cygnus Mines Limited, a wholly‐owned subsidiary of US Steel). American Comstock drilled 2,847m in eight holes. 686 samples were analyzed for copper, molybdenum and silver. Subsequently, American Comstock dropped the Cygnus option (Quebec Cartier claims) but maintained ownership of the Noranda claims. YMI was formed in 2005 as a private British Columbia company. In 2005 and 2006, five claim groups were acquired or optioned by YMI on the historical drilling area and contiguous parts of the Eagle Bay Assemblage, that includes the Harper Creek deposit. In 2006, YMI began the company’s first phase of field exploration on the Harper Creek claims. 1.4
Geology & Deposit
The Property is an extensive volcanogenic hosted sulphide system with a mineralized envelope, as defined by drilling to date, greater than 2.5km along strike, over 2.0km down‐dip, and 1km thickness of volcano‐sedimentary stratigraphy. Copper mineralization is tabular, striking east‐west and dipping about 25° to 45° to the north including a number of high copper grade cores that persist with depth within a multi‐phased stringer zone. The deposit is open along strike to the east, down dip to the north and at depth down section. A broad lower‐grade zone of copper and gold/silver is linked to multi‐phased stringer or feeder zones. Higher‐grade copper‐bearing massive sulphides are adjacent to porphytic rhyolite domes. Regionally, vertical zonation of mineralization ranges from upper lead/zinc/silver/barite/pyrite to deeper copper (trace zinc) /silver/gold/phrite/pyrrotite. The Harper Creek deposit is located within the lower sequence. In 2006, a 12‐hole, 4,077m in‐fill drilling program intersected several high‐grade zones and confirmed the volcanogenic hosted sulphide characteristics of the deposit. At least ten horizons were identified, with both open‐pit and underground potential. In 2007, YMI completed a 15,904m, 40‐hole drill program. The first six step‐out holes down‐dip all encountered multiple mineralized horizons including massive sulphide zones.
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
There are specific and continuous geophysical anomalies and mineralized outcrops occurring about 1km to the south and 3km to the east of the current pit limit. 1.5
Phase VIII Exploration Program
The current exploration program (Phase VIII) was undertaken from March 19, 2011 to September 25, 2011. Figure 1‐3 shows the layout of the drill holes for the FS program. Work consisted of:
core re‐logging: 45 historical YMI drill holes, totaling 17,297.17m, including: 18 detail logged (7286.87m), 27 quick logged (10,010.30m);
diamond drilling: 32 drill holes (HC11‐88 to HC11‐119) from 30 drill pads, totaling 8,190.59m;
submission of 6,218 drill core samples for analysis; and
completion of the geological model.
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
Figure 1‐3: Phase VIII Drill Hole Layout (CME 2012)
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
The objectives of increasing the confidence in the near‐surface zones of mineralization in areas of low density drilling and developing a geological model were achieved. The geological model encompasses multiple sequences of depositional and structural events. Southwest‐northeast trending thrust faults developed along lithologic boundaries that may have thickened mineralized zones through drag folding and/or stacking. Following this, a second generation of southwest‐northeast trending thrust/reverse faulting occurred that caused the geological packages to be thrusted on top of one another creating a ‘stacking effect’. Structural control of the mineralization, whether by faulting, fracturing or in foliation planes is common throughout the deposit. Although the thrusting/reverse faulting period may have cut off mineralization in places, it has also thickened it by stacking. These thick sequences of copper mineralization can be observed over multiple drill holes throughout the deposit, particularly in the central‐eastern portion of the deposit. The stacking effect also explains the variability in continuity of copper mineralization observed in cross‐ sections. Finally, the entire stratigraphic section was uplifted from the south by the intrusion of the Baldy batholiths resulting in a regional dip of 25 to 45° to the north, south of the North Thompson River. A similar regional dip in the stratigraphy but to the south is caused by the Raft batholiths on the north side of the river. Drilling confirmed that the deposit can been divided into two distinct domains (North‐West and South‐ East) separated by the NE‐SW trending Harper Creek Fault and was successful in further developing the resource within the proposed pit limits. 1.6
Mineral Processing and Metallurgical Testing
The 2011 FS metallurgical test program achieved its objectives in both confirming and improving upon the results of the PEA. In particular, the FS focused on:
Potential to increase grind size without adversely affecting concentrate grade and recovery; and
Potential to simplify the reagent schedule.
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
The PQ drilling program was undertaken to source samples for the FS metallurgical testwork program. In all, four holes were located to ensure a representative sample of lithologies and grades covering the first 10 years of mine production was collected. A total sample weight of 5,261kg was sent to G&T for testing, and 752kg was sent to FLS for comminution testwork. Three lithologies dominate the deposit. Approximately 50% is quartz eye schist with some slight variation in the precise breakdown of minerals, but with serecite‐chlorite‐quartz dominant. Schists (without quartz eyes) represent 21% and phyllites represent 19%. All other classifications each represent less than 1% of the overall resource with the exception of silica alteration representing 6.5% of the three main ore types. There is some slight variation in the lithological breakdown in different areas of the deposit and was tested in zonal composites. Various mineralogical studies have been carried out, most recently by G&T. It was determined that chalcopyrite is the dominant copper mineral representing >98% of the copper species in the main grade/lithology composites. The only composite to fall below 98% chalcopyrite is a silica altered species which contains 94.5% chalcopyrite with 2% bornite and the balance equally covellite and chalcocite. The FS testwork carried out by FLS on the nine samples indicated BMWi values ranging between 10.5 to 19.1kWh/t with an average of 13.19kWh/t, confirming the previous soft mineralization results reported in the PEA. Preliminary evaluation indicated that the ore would be amenable to either SAG mill/ball mill circuit or a SABC circuit (includes pebble crushing). KWM Consulting Inc. (KWM) independently evaluated the grinding power requirements. Following seven (7) simulations, KWM recommended that the SAG mill/ball mill grinding circuit include a 20.1MW SAG mill and 2 parallel MW ball mills with a combined total of 26.9MW. The PEA flowsheet with a finer primary grind (P80 106µm) running essentially at a natural pH (8.5) achieved rougher copper recoveries close to 93% but at a concentrate weight pull to rougher/scavenger concentrates of around 12%. This is very typical of many low grade copper operations. The FS program rougher scavenger recovery was about the same; 93% copper recovery but at a weight pull of almost half (~6.5%) that achieved in the PEA. This was done at a coarser grind (P80 180µm) but perhaps more importantly, at a high pH (11). This is abnormally high for a rougher/scavenger circuit (but quite
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Prepared for Yellowhead Mining Inc. Technical Report and Feasibility Study For the Harper Creek Copper Project March 29, 2012
common in a cleaner circuit). It is notable that the high pH was clearly enabling much more pyrite to be rejected in the rougher circuit, but at no significant loss in copper. It is the fear of copper loss that has generally driven the operation of rougher circuits at lower pH (