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| Mining in B.C.<br />
Areial view of<br />
Stuart Bulk Mill terminal.<br />
CRAVING<br />
COPPER<br />
Castle Resources sets sights on reopening Granduc mine<br />
By Marilyn Scales<br />
The Granduc mine near Stewart, BC, was a proven producer.<br />
When it operated between 1971 and 1984, it produced 420<br />
million lb of copper. The chances of reopening are good.<br />
New owner Castle Resources of Toronto has outlined millions<br />
more reasons to redevelop the underground mine and mill.<br />
Castle acquired the Granduc property for the bargain price of<br />
$4 million from Bell <strong>Copper</strong> in July 2010 and immediately began<br />
the hunt for additional resources. By the end of the year, drilling<br />
had extended the known strike and confirmed that significant<br />
copper mineralization remained below the mined-out areas.<br />
In February 2011, the 43-101-compliant indicated resource<br />
was 3.75 million tonnes grading 1.59% Cu and containing 131.4<br />
million lb of copper (using an 0.8% Cu cut-off). In addition, the<br />
inferred resource is 15.8 million tonnes grading 1.36% Cu and<br />
A close look<br />
at Granduc core.<br />
containing 471.5 million lb of copper. The estimate was prepared<br />
by SRK Consulting (Canada).<br />
So far there are more than 600 million lb of newly identified<br />
copper at Granduc – expressed another way, there were over 600<br />
million reasons to push the project forward.<br />
The blue-sky potential of the property is vast. There may be as<br />
much as 100 million tonnes of mineralization on the property. The<br />
North zone, where some of the inferred resource has been drilled,<br />
is open both to the north and at depth. North of the North zone lies<br />
the untested JK zone. Below the Main zone that was previously<br />
mined, Castle has identified indicated resources and, under that,<br />
inferred resources. The potential of the Main zone continues at<br />
depth. There is also the South zone that lies under the nearby Leduc<br />
Glacier, an area that was recently targeted as part of Castle’s comprehensive<br />
30,000 meter program in 2011.<br />
As well as outstanding geological resource potential, the<br />
Granduc project shares many of the benefits of being a brownfield<br />
development. Infrastructure is available, as well as access to the<br />
mine, a 17-km haulage tunnel to the mill site and a 50 km access<br />
road to the port in Stewart. There are several options for tailings<br />
management currently being analysed. Castle is also working on a<br />
power supply with BC Hydro.<br />
Start in the middle<br />
The first step toward reopening the Granduc mine was to rehabilitate<br />
the 17-km-long tunnel between the mine and the mill.<br />
The tunnel provides both access to the mine and a means of moving<br />
ore to the mill at Granduc. Work is well advanced, and the<br />
$5-million project was completed earlier this month by Procon<br />
18 | Canadian Mining Journal • January 2012 www.canadianminingjournal.com
Mining and Tunneling. Because the original rail line was<br />
removed, the rehab work was done with trackless equipment. But<br />
Castle is considering building a new rail system as the most economic<br />
means of moving the ore to the mill.<br />
At the helm of Castle Resources is industry veteran Mike<br />
Sylvestre. With mining engineering degrees from both McGill<br />
University and Queen’s University, he worked for Inco in the<br />
Sudbury Basin and at the Casa Berardi gold mine. Most recently he<br />
was CEO of Vale Inco’s Goro nickel project in New Caledonia. He<br />
was also president at Vale Inco Manitoba and vice-president at PT<br />
Inco in Indonesia. With his executive appointment at Castle<br />
Resources in June 2011, he settled his family in Port Hope, Ont.<br />
So why join a copper junior?<br />
“It’s a very different experience for sure”’ Sylvestre admits. “There<br />
is less bureaucracy and more entrepreneurism involved which is<br />
a change that I enjoy. I am much more aware of how juniors work<br />
and how they create value for shareholders”.<br />
His efforts have been successful. Castle has raised nearly $30<br />
million for the Granduc project. The company raised $10.3 million<br />
in October 2010, $12.3 million on February 2011 and<br />
another $6.0 million in October 2011.<br />
Sylvestre told CMJ that the pre-production capital expenditures<br />
for the Granduc project will probably be in the $400 million<br />
range. That number will be firmed up when SRK Consulting<br />
completes the scoping study later this year.<br />
With the tunnel readied, underground rehabilitation will be carried<br />
out in three stages. Exploration drill stations will be established<br />
on the 2475 level and below to continue drilling the main zone.<br />
Drilling of the North zone and Castle also envisions a new South<br />
zone exploration drift below the Leduc Glacier.<br />
Granduc was mined by previous owners Newmont Mining<br />
and Esso Resources using sublevel caving techniques. Castle<br />
intends to do the same at a rate of 8,500 tonnes of ore per day.<br />
The mill, located at the east end of the tunnel, was decommissioned<br />
when the mine closed in 1984; the mill has to be rebuilt.<br />
Processing will likely include primary and secondary crushing,<br />
SAG and ball milling followed by flotation in large cells, and<br />
perhaps column cells. Conceptual costs are expected to be in the<br />
neighbourhood of US$1.50/lb of copper produced before byproduct<br />
credits.<br />
The project will likely recover between 80 million and 100<br />
million lb of copper annually.<br />
Historically, Granduc produced a very clean 29% to 30% Cu<br />
concentrate, and that is anticipated when the new mill is operational.<br />
<strong>Copper</strong> recovery is expected to be 95%. Concentrates were<br />
sold to Asian customers, and that may again be the case.<br />
The way forward<br />
Castle believes a workforce for Granduc can be attracted back to<br />
the town of Stewart with its long history of mining. The population<br />
is low now, perhaps less than 200, but the town has a school,<br />
a medical clinic and recreation centre. The Granduc mine and<br />
mill will create 250 to 300 well-paying jobs for miners and the<br />
families that will come with them.<br />
Sylvestre said there are no land claims registered against the<br />
Plenty of activity in the<br />
Le Duc core shack.<br />
mine site. The company has complete mineral tenure.<br />
Nonetheless, Castle has opened a dialogue with the Nisga’a<br />
Nation and discovered it can provide many supply chain opportunities<br />
and a pool of skilled workers.<br />
The last hurdle is raising the $400 million necessary for redevelopment.<br />
That is a challenge for any junior company, but<br />
Sylvestre says there are options. Castle might raise the capital on<br />
its own, depending on the strength of the financial markets when<br />
it comes time. Another option might be to sell 20% or 25% of the<br />
project to an off take partner. Decisions such as those remain in<br />
the future.<br />
If Castle can stick to the timeline it has set for the Granduc<br />
project, 2012 will be a busy year. It has planned 15,000 metres of<br />
underground drilling, receipt of the preliminary economic<br />
assessment and start of the feasibility study. Permitting will also<br />
get underway. Next year activity will ramp up with the beginning<br />
of construction in preparation for the first concentrate production<br />
in 2016.<br />
CMJ<br />
A picturesque look<br />
at the winter camp<br />
located near the<br />
tunnel portal.<br />
January 2012 • Canadian Mining Journal | 19