With two world-class metals deposits and strong partnerships Trilogy Metals Inc. aims to develop the Upper Kobuk Mineral Projects in Northwest Alaska into one of the highest grade copper mining districts on Earth.
These high aspirations got a boost when South32 Ltd., a coal and base metals miner spun out of BHP Billiton, cut a US$150 million deal with Trilogy to earn up to a 50 percent interest in UKMP, a vast land package that blankets most of the renowned Ambler Mining District.
South32 has the option to buy a 50 percent stake in UKMP any time over the next three years for US$150 million, which is about US$50 million more than Trilogy has invested in the project so far.
This will likely be enough cash to take both of the two most advanced projects at UKMP, Arctic and Bornite, through feasibility and permitting.
To keep the option in good standing, South32 has agreed to fund US$30 million on the advancement of UKMP over the next three years, including a US$10 million program focused on expanding the enormous high-grade copper deposit at Bornite.
At the same time, Trilogy is finalizing a pre-feasibility study of developing an open-pit mine at Arctic, a high-grade volcanogenic massive sulfide deposit located about 16 miles north of Bornite.
“With a US$17 million total budget this year for exploration at Bornite and the Arctic PFS, it will be a very busy and productive year ahead for the company,” said Trilogy Metals President and CEO Rick Van Nieuwenhuyse.
NANA welcomes partner
Blanketing the vast majority of the renowned Ambler Mining District, UKMP includes a block of state mining claims held by Trilogy that stretches 70 miles (110 kilometers) along the southern slopes of the Brooks Range and a land package immediately to the south that is owned by NANA, the Alaska Native Regional Corporation that represents the Inupiat people of Northwest Alaska.
Arctic, along with more than a dozen other VMS deposits and prospects rich in copper, zinc, lead, gold and silver have been discovered across the Trilogy claims. Bornite and other copper-rich prospects are located on the NANA lands.
A 2011 agreement between Trilogy and NANA brought these two high-grade Ambler district properties together into what is now known as UKMP.
NANA, which has an option to be a 16 to 25 percent equity partner in UKMP or receive 15 percent net proceeds royalty from any mines developed on the 353,000-acre land package, sees a new partner with ample funds and mining knowhow as a positive step.
“NANA looks forward to partnering with Trilogy and South32 on this new phase of exploration,” said NANA President and CEO Wayne Westlake.
NANA is also a 35 percent partner in the Red Dog Mine, which is located on lands it owns about 180 miles northwest of UKMP.
“Our region has benefited from responsible resource development, and we value working with companies that advance our land’s mineral potential and create shareholder value while respecting our traditional subsistence lifestyle,” Westlake added.
Expanding Bornite
For 2017, South32 invested US$10 million on a 10,000-meter drill program focused on expanding upon the more than 6 billion pounds of copper Trilogy has outlined at Bornite.
Roughly 2.7 billion lbs. of this copper is encompassed in an open-pit resource averaging roughly 1 percent copper.
The remaining roughly 3.7 billion lbs. is located in a deeper underground resource that averages about 2.9 percent copper.
The deeper and highest-grade portion of Bornite was the target of 2017 drilling.
In 2013, the last year Trilogy had drills turning at Bornite, five holes cut rich copper zones along a 1,000-meter-wide front to the north.
Hole RC13-0220, the most northeasterly of these holes, cut two high-grade intervals from 809.1 meters (at a 0.5 percent cut-off) – 45.6 meters of 1.07 percent copper; and 80.4 meters of 1.89 percent copper.
Hole RC13-0224, drilled about 800 meters west of hole 220, cut two high-grade intervals from a depth of 513.3 meters along this northern front – 229.4 meters of 1.73 percent copper; and 6.6 meters of 7.7 percent copper.
Trilogy has been anxious to find out just how far north this high-grade copper goes.
“We have waited three long years to be able to come back and drill at Bornite,” said Van Nieuwenhuyse.
With the first three holes tapping high-grade copper 300 meters farther north, the long-anticipated program was worth the wait.
RC17-0234, the first hole of 2017, cut three high-grade copper intervals roughly 250 meters north of RC13-0220 – 21 meters of 1.29 percent copper; 26.8 meters of 1.44 percent copper; and 36 meters of 0.72 percent copper.
The top of the Bornite mineralization in hole 234 was reached at a drill depth of 935.3 meters.
RC17-235W, drilled about 250 meters west of hole 220, cut two zones of copper from a depth of 661.8 meters – 6.1 meters of 0.69 percent copper; and 26.9 meters of 0.94 percent copper.
RC17-0234, drilled 300 meters north of hole 224, cut two high-grade copper intervals from a depth of 720.8 meters – 27.1 meters of 0.8 percent copper; and 89.3 meters of 1.13 percent copper.
“The initial three step-out holes at Bornite demonstrate that high-grade copper mineralization continues to the north and east of previously drilled resources,” said Van Nieuwenhuyse.
The 2017 holes were drilled at very wide spacing, and while assays were pending at the time of this report, the core from these holes show evidence of continued thick zones of Bornite-style mineralization.
Van Nieuwenhuyse said that if these holes are tapping high-grade copper, the 2017 drilling will roughly double the Bornite footprint.
The Trilogy CEO said that significant amounts of cobalt are also showing up in the assays, particularly in the higher grade copper zones.
More geochemical and metallurgical work is planned for the cobalt.
Arctic Mine project
As deep directional drills traced high-grade copper at Bornite, Trilogy collected the final bits of data needed to finalize a pre-feasibility study that will detail plans for an open-pit mine at Arctic.
In 2013, Trilogy completed a preliminary economic assessment that provided a first glimpse of what such a mine might look like.
This scoping level study outlined a 10,000-metric-ton-per-day mill at Arctic that is anticipated to produce roughly 1.5 billion lbs. of copper, 1.8 billion lbs. of zinc, 289 million lbs. of lead, 30.5 million oz of silver and 349,000 oz of gold over a 12-year mine-life.
The Arctic deposit currently hosts 36 million metric tons of indicated resource averaging 3.07 percent (2.44 billion lbs.) copper, 4.23 percent (3.36 billion lbs.) zinc, 0.73 percent (581 million lbs.) lead, 0.63 grams-per-metric-ton (728,000 oz) gold, and 47.6 g/t (55 million oz) silver; and 3.5 million metric tons inferred resource averaging 1.71 percent (131 million lbs.) copper, 2.72 percent (210 million lbs.) zinc, 0.6 percent (47 million lbs.) lead, 0.36 g/t (40,000 oz) gold and 28.69 g/t (3 million oz) silver.
“It is a spectacular deposit – 40 million tonnes roughly of 5 percent copper-equivalent,” Van Nieuwenhuyse said.
An updated resource that is expected to upgrade much of the inferred resource into the higher confidence measured and indicated categories, is slated to be published before the end of 2017. In turn, much of the measured and indicated resources will convert to reserves once the prefeasibility study is complete, expected early in 2018.
Connecting UKMP
The mill at Arctic will likely produce three separate concentrates – copper with gold and silver; zinc; and lead with gold and silver – that will need to be shipped to refineries for further processing. This project, however, is located about 200 miles from the nearest road, at least for now.
Understanding the exceptional potential of the Ambler district, the State of Alaska began studies on the potential of building a road to the metals-rich region in 2009. Alaska Industrial Development and Export Authority, a quasi-state-owned entity established by the Alaska Legislature to provide financing for Alaska businesses that will expand the state’s economy, took the lead on the potential development of a road to the Ambler district in 2013.
The Ambler Mining District Industrial Access Road, the official name of the resulting proposed 211-mile transportation corridor, would run west from the Dalton Highway along the southern foothills of the Brooks Range to the Ambler Mining District near the Arctic deposit.
Trilogy and AIDEA entered into a memorandum of understanding in 2015 that paves the way for the development authority to investigate various ways to fund the construction and maintenance of the Ambler Road and create the framework by which this investment would be paid back from mines developed at the road’s terminus.
A similar arrangement for the Delong Mountain Transportation System, a road and port facility linking the Red Dog zinc-lead mine to world markets, has proven to be a good investment for AIDEA and the state.
Ideally, the road and first mine would be completed about the same time. To keep the road side of this development on schedule, AIDEA submitted applications in 2016 for rights-of-way, permits and related authorizations needed for the road.
With a road and a mine to support it, the potential of one of the richest undeveloped mining districts may finally be realized.
“Major mining districts take time to develop, and we are fortunate to have long-term support through our partnerships with NANA, AIDEA and South32, as well as continued support from our large shareholders.” Van Nieuwenhuyse said.
