NovaCopper CEO: Ambler District potential justifies road
NovaCopper Inc. CEO Rick Van Nieuwenhuyse said his company is near a goal of 10 billion pounds of copper for potential development in the Ambler Mining District.
The Ambler Mining District, which stretches for approximately 75 miles between the Brooks Range to the north and the upper Kobuk River to the south, is a world-class copper deposit, Van Nieuwenhuyse said at an April 3 Resource Development Council presentation.
“The thing that’s unique about Ambler is grade,” he said.
Vancouver-based NovaCopper has two large areas of focus in Ambler, the Arctic deposit and its 3.1 billion pounds of 6 percent indicated copper and the Bornite deposit, with 5.7 billion pounds of inferred resources and 300 million pounds of indicated copper.
The Arctic deposit also has 400 million-pound inferred resource and could be worth up to $1.4 billion over a conservative 12-year mine life.
The resource estimates for the Arctic deposit are from a September 2013 preliminary economic assessment. Bornite figures are from a technical report NovaCopper released April 1.
South of the main mining district, the Bornite deposit is separated into 2.3 billion pounds of about 1 percent-grade surface-accessible copper ore and 3.4 billion pounds of high-grade, 2.8 percent copper ore that would be reached via underground mine, Van Nieuwenhuyse said.
Overall, Arctic ore is believed to average a 3.3 percent copper grade and 4.5 percent zinc.
If developed, it would also yield about 29,000 ounces of gold and 2.5 million ounces of silver yearly, he said.
Because of the quality of the Arctic deposit, its estimated capital requirement of about $7,000 per ton of material is about half of the industry average, according to Van Nieuwenhuyse. Still, the one mine would have a startup cost of more than $700 million and cost $164 million per year to operate, he said.
Those costs are calculated with diesel power. If the state’s plan for trucking North Slope liquefied natural gas to Interior comes to fruition, potential mine development — from NovaCopper and others — could stand to benefit from the lower cost fuel, too.
“The trucks would just have to learn to turn right off the Dalton Highway,” Van Nieuwenhuyse said.
The trucks would turn onto a roughly 200-mile long access road to the Ambler Mining District. Both the Alaska Industrial Development and Export Authority, which took over work on the road proposal from the Department of Transportation for financing purposes, and Van Nieuwenhuyse have said no Ambler-area mines will be developed without a road.
During March legislative hearings, AIDEA Deputy Director Mark Davis said what is envisioned for the road now is a one-lane industrial road at a cost of nearly $400 million. AIDEA is working to “value engineer” the cost down, Davis said.
In an interview, Van Nieuwenhuyse said he would like to see a road financed through bonds or lower interest loans paid by tolls, rather than direct private investment.
To date, there has been about 127,000 meters of exploratory drilling done in the Arctic and Bornite deposits, Van Nieuwenhuyse said, about 48,000 meters of which was done by NovaCopper. Previous exploration teams did the rest from the late-1950s through the late-1980s.
The drilling done recently has been done with operations set up primarily with helicopters, he said.
“There’s hardly any drilling in this district because it’s bloody expensive,” Van Nieuwenhuyse said.
Since 2004, he said NovaCopper has spent $82 million on exploration of the Arctic and Bornite deposits.
“Any district worth its salt would have millions of meters of drilling,” Van Nieuwenhuyse said.
He continued: “Just to develop the mining district, just from a drilling standpoint, you could justify building a road just on that.”
Over the next three years, NovaCopper will be working on combining the Bornite and Arctic projects first in feasibility studies and then financing plans, he said.
Whether or not a road would be seen as justified without a firm commitment of mine development from the state or region stakeholders remains to be seen.
Van Nieuwenhuyse said the impact a road could have on caribou, the primary subsistence resource in the region, needs to be studied further. He added that NovaCopper’s work is gaining traction among the residents in the potential corridor because of the prospect of well-paying jobs and access to lower-cost fuel provided by the road.
Inland Northwest Alaska communities have some of the highest fuel costs in the state.
According to Van Nieuwenhuyse, his company has paid $1.3 million to regional NANA Development Corp. and village corporation shareholders over the last three years for work at the exploration sites.
Elwood Brehmer can be reached at email@example.com.