1. Refer to Table 1 for base case metal prices 2. Refer to Figure 1 for spot metal prices 3. Pounds of copper equivalent calculated on base case metal prices stated in Table 1 4. Refer to Table 8 for all-in sustaining cost (AISC) calculation methodology
Kutcho Copper Corp. | 717 – 1030 West Georgia Street | Vancouver, British Columbia | Canada | V6E 2Y3 Telephone: (604) 628-5623 | www.kutcho.ca
Kutcho Copper Announces Results of Feasibility Study
Vancouver, B.C., November 8, 2021. Kutcho Copper Corp. (TSXV: KC, OTCQX: KCCFF) (“Kutcho Copper” or the “Company”) is pleased to announce the results of the 2021 Feasibility Study (“FS” or “Feasibility Study”) for the development of the 100% owned Kutcho copper and zinc project (“the Kutcho project” or “the Project”) in northern British Columbia.
- ROBUST PROJECT ECONOMICS
- Base case metal prices(1) of $3.50/lb Cu, $1.15/lb Zn
- Pre-tax NPV7% C$737 million, IRR 31%
- After-tax NPV7% C$461 million, IRR 25%
- Spot metal prices(2) of $4.50/lb Cu, $1.57/lb Zn
- Pre-tax NPV7% of C$1,467 million; IRR 51%
- After-tax NPV7% of C$931 million; IRR 41%
- Base case metal prices(1) of $3.50/lb Cu, $1.15/lb Zn
- LOW COST PRODUCTION
- Cash costs of US$1.11/lb of CuEq(3)
- All-in sustaining costs(4) of US$1.80/lb of CuEq
- Initial capital cost of C$483 million
- ELEVEN-YEAR OPEN PIT AND UNDERGROUND MINE LIFE
- Metal production of 533 Mlbs Cu, 841 Mlbs Zn, 10.6 Moz Ag, 129.7 koz Au
- HIGH GRADE MINERAL RESOURCE(5)
- 22.8 million tonnes grading 2.26% CuEq containing 1.1 Blbs CuEq (764 Mlbs Cu, 1,096 Mlbs Zn)
- An additional 12.9 million tonnes grading 1.62% CuEq containing 460 Mlbs CuEq in the inferred
category (312 Mlbs Cu, 449 Mlbs Zn)
- STABLE MINING JURISDICTION SITUATED IN NORTHERN BRITISH COLUMBIA, CANADA
- One of the safest global mining jurisdictions, located in the traditional territories of the
Tahltan Nation and Kaska Dena Nation
Vince Sorace, President & CEO of Kutcho Copper commented: “The Feasibility Study represents a major milestone for Kutcho Copper as we continue to advance the high-grade Kutcho copper-zinc project towards a development decision. The significant redesign and engineering of the Project delivers a mine plan that is a predominantly open pit mining operation with the concurrent development of two underground mines. The mine plan has resulted in a technically robust and capital efficient Project with a minimised footprint. The results of the Feasibility Study highlight the attractive economics of the Kutcho project which are resilient at lower metal prices, very attractive at base case prices and exhibit significant leverage to rising prices as reflected in spot metal prices with a C$931 million after-tax NPV7% and a 41% IRR. We believe that the results of the Feasibility Study mean that Kutcho Copper is now one of the most undervalued copper investment opportunities in North America.”
1. Refer to Table 1 for base case metal prices
2. Refer to Figure 1 for spot metal prices
3. Pounds of copper equivalent calculated on base case metal prices stated in Table 1
4. Refer to Table 8 for all-in sustaining cost (AISC) calculation methodology
5. Refer to Table 2: Estimate of Mineral Resources for the Kutcho Project
Table 1: Feasibility Study Headline Results
| PROJECT VALUATION | |
|---|---|
| Net Present Value @ 0% discount rate, after-tax Net Present Value @ 7% discount rate, after-tax Internal Rate of Return (IRR), after-tax Payback Period (Production Start) Net Smelter Revenue(1) Pre-Tax Cash Flow After-Tax Cash Flow | C$841 million C$461 million 25 % 3.4 years C$2,979 million C$1,264 million C$841 million |
| METAL PRICES (BASE CASE) | |
| Copper Zinc Silver Gold | US$3.50 /lb US$1.15 /lb US$20 /oz US$1,600 /oz |
| MINERAL RESERVES | |
| Total Reserve (Proven and Probable) | 17.3 Mt |
| Copper grade Zinc grade Silver grade Gold grade | 1.58% 2.31% 28 g/t 0.39 g/t |
| PROJECT TECHNICALS | |
| On-site construction period(2) Mining life Processing life Open pit mining Underground mining Open pit strip ratio Mining rate Processing rate (including ore sorter) | 2 .0 years 8.0 years 10.75 years 14.5 Mt 2.8 Mt 5.6 : 1 1.6 Mtpa / 4,500 tpd 1.4 Mtpa / 3,900 tpd |
| PRODUCED METAL IN CONCENTRATE | |
| Copper Zinc Silver Gold | 533 Mlbs 841 Mlbs 10.6 Moz 129.7 koz |
| OPERATING COSTS(3) | |
| Open pit mining Open pit mining Underground mining Processing General and Administrative | C$2.87/t ore moved C$24.75/t ore mined C$55.38/t ore mined C$28.21/t ore crushed C$8.79/t ore crushed |
| Total | C$65.89/t ore crushed |
| Cash cost, CuEq(4) All-in sustaining cost (AISC), CuEq(5) | US$1.11 /lb CuEq US$1.80 /lb CuEq |
| CAPITAL COSTS(6) | |
| Initial capital Sustaining capital Mine closure bond Closure and rehabilitation Mine closure bond recovery Salvage | C$483 million C$90 million C$19 million C$34 million -C$19 million -C$18 million |
| Total | C$589 million |
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Notes:
- Tonnages are reported in metric tonnes (t), copper and zinc in pounds (lbs), silver and gold reported in troy ounces (oz).
- "M" = million, "k" = thousand
- All tables report rounded figures and may not sum precisely.
- The financial model is based on 100% of the Project being financed through equity (no equity from other projects can be used to offset the cost of capital).
No debt or equity schedule is included.
- All values, unless otherwise stated, are undiscounted.
- The highlights refer to the Feasibility Study base case. The Wheaton Precious Metals Purchase Agreement is not applied to the base case.
1. Net smelter revenue (NSR) includes royalty payments.
2. On-site construction period excludes the access road construction and a 3 month commissioning period.
3. Operating costs exclude the pre-production period which are allocated to Pre-Production Capital).
4. Cash or operating costs are operating expenses for mining, plant operations and administration to the point of production of the concentrate at the Kutcho site. It excludes off-site concentrate costs, sustaining capital, closure/rehabilitation and royalties. CuEq calculation assumes metal base case prices.
5. All-in sustaining costs includes all cash costs, sustaining capital expenses to support on-going operations (such as TMF construction, major plant equipment replacement and repair), concentrate charges, and royalties. It includes closure and rehabilitation costs.
6. No inflation or depreciation of costs were applied; all costs are in 2021 money values. Major underground mobile equipment, all open pit mobile equipment and the power plant are leased. Contingencies included.
Figure 1: Sensitivity of Base Case After-Tax NPV7% and IRR to Metal Prices (US$:C$ FX Rate at 0.76)
Note:
1. Spot metal prices as at 26 October 2021: Copper US$4.50/lb, Zinc US$1.57/lb, Silver US$24/oz, Gold US$1,788/oz.
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Figure 2: Sensitivity of Base Case After-Tax NPV7% and IRR to Copper Price Only (US$:C$ FX Rate at 0.76)
Note:
1. Only copper price adjusted.
2. Spot copper price as at 26 October 2021: US$4.50/lb.
Project Summary
The Kutcho project is located in northern British Columbia (BC), approximately 100 km east of Dease Lake within the traditional territories of the Tahltan Nation and Kaska Dena Nation. The Project described in the Feasibility Study contemplates mining the Main and Esso deposits to extract mainly copper and zinc, with minor quantities of gold and silver. The Main deposit is designed to be mined primarily as a conventional shovel and truck open pit operation, with a deeper remnant mined by underground longitudinal longhole open stoping (LLHOS) with cemented rock fill (CRF). The underground Esso deposit is also designed to be mined using LLHOS with CRF. A total of 17.3 Mt is planned to be mined over an 11 year mine life, with 14.5 Mt coming from the open pit and 2.8 Mt from the underground mines. A steady-state crusher production rate of 4,500 tonnes per day (tpd) is expected be achieved by the end of the first year of operations.
After primary crushing at an average steady state rate of 4,500 tpd, an ore sorter utilizing an x-ray transmission (XRT) sensor would remove low-grade and waste material from the feed to the SAG and ball mills, followed by conventional flotation, regrind and dewatering circuits. Approximately 3,900 tpd of ore would report to the milling and flotation circuit after ore sorting. A total of 533 Mlbs of copper and 841 Mlbs of zinc as primary products, and 10.6 Moz of silver and 129 koz of gold is anticipated to be recovered to concentrate for sale.
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The Project design includes an extensive progressive reclamation programme, including the backfilling of the open pit and water treatment during operations and for the closure period.
The Project is located within the traditional territories of the Tahltan Nation and Kaska Dena Nation. Kutcho has a good working relationship with these Nations and has started discussions with both to develop Economic Participation Agreements that would safeguard their interests, provide employment, and benefit the Nations economically.
Feasibility Study Participation
The study was led by CSA Global and included the support of SIM Geological Inc., Allnorth Consultants Ltd., ABH Engineering Inc., Mineit Consulting Inc., Terrane Geoscience Inc., Piteau Associates, and Onsite Engineering Ltd., all of which are independent of the Company.
Environment, Social and Governance
Environmental The Kutcho Project is designed with environmental protection in mind; final closure and reclamation were key drivers in the design process. Various environmental protection and impact mitigations are incorporated, with the highlights being:
- Upgrading the site access road to minimize impact on water quality and natural resources, including runoff control and clear span bridge crossings
- Use of liquified natural gas for power generation as opposed to diesel, significantly reducing the generation of greenhouse gases and reducing the potential for fuel spills
- The tailings management facility (TMF) is designed to be a fully-lined impoundment with the rockfill embankment comprising non-potentially acid generating (nPAG) waste rock and built using downstream construction methods
- On closure, the TMF would be capped with nPAG waste rock and revegetated
- Waste rock not required for construction would be placed on a stockpile, most of which would be backfilled into the pit during operations and revegetated
- Potentially acid generating (PAG) waste rock would be placed on temporary stockpiles, all of which would be rehandled back into the pit at the end of the mine life to reduce the risk of future acid generation or metal leaching
• No infrastructure is located within fish-bearing streams
- The water management system would divert non-contact water around proposed mine facilities
- Contact water would be collected for operational re-use or treated in a water treatment plant prior to discharge to the environment to ensure adherence to provincial and federal water quality guidelines
- At closure all buildings would be removed, disturbed lands rehabilitated, and the property returned to functional use according to as yet to be developed and approved reclamation plans and accepted practices at the time of closure
Social
- The Project is located within the traditional territories of the Tahltan Nation and Kaska Dena Nation
- Kutcho has a good working relationship with these Nations and commenced discussions with both to develop Economic Participation Agreements that would safeguard their interests, provide employment, and benefit them economically -5-
- Kutcho Copper remains committed to de-risking and advancing the Kutcho project in close consultation with the Tahltan and Kaska Dena Nations
Governance
- Kutcho Copper is committed to the principles of good governance, openness and transparency in all its activities and has begun developing appropriate policies, controls and practices for the next phase of the Project’s development.
Location and Access
The Kutcho project is located in northern British Columbia, approximately 100 km east of Dease Lake and 425 km north of Terrace, BC. Access to the site during construction and operations would be via an upgraded 120 km gravel road that joins the Stewart–Cassiar Highway 37 directly south of Dease Lake. In addition, a 1,000 m long airstrip is located about 10 km to the northwest of the mine site.
First Nations and Local Communities
The Kutcho project is located within the traditional territories of the Tahltan Nation and Kaska Dena Nation. The closest community to the mine site is Dease Lake. Traditional use of lands and resources in the vicinity of the Project have been documented for both the Tahltan Nation and Kaska Dena Nation. Kutcho Copper is committed to working and consulting with the First Nations following a jointly developed Consultation Plan. To this end, Kutcho Copper and the Tahltan Nation and Kaska Dena Nation have already signed several agreements. Kutcho Copper has also initiated discussions to develop the access road to the Project site in partnership with Tahltan Nation and Kaska Dena Nation.
Mineral Resource Estimate
The mineral resource estimate for the Kutcho project was prepared by SIM Geological Inc. in accordance with current CIM standards, definitions and guidelines, with an effective date of 30 July 2021. Mineral resources tabulated below are inclusive of mineral reserves.
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Table 2: Kutcho Project - Estimate of Mineral Resources Inclusive of Reserves (effective 30 July 2021)
| Resource Classification | Tonnes (000) | CuEq (%) | Cu (%) | Zn (%) | Ag (g/t) | Au (g/t) |
|---|---|---|---|---|---|---|
| Main Deposit (pit constrained, 0.45% CuEq cut-off) | ||||||
| Measured | 7,213 | 2.31 | 1.64 | 2.35 | 24.7 | 0.36 |
| Indicated | 12,201 | 1.79 | 1.27 | 1.64 | 22.8 | 0.32 |
| Measured + Indicated | 19,414 | 1.98 | 1.41 | 1.90 | 23.5 | 0.34 |
| Inferred | 459 | 1.35 | 0.78 | 1.24 | 16.8 | 0.60 |
| Main Deposit (below open pit, 1.05% CuEq cut-off) | ||||||
| Indicated | 793 | 1.93 | 1.35 | 1.54 | 30.3 | 0.45 |
| Inferred | 1,717 | 1.87 | 1.19 | 1.90 | 26.1 | 0.49 |
| Esso Deposit (0.95% CuEq cut-off) | ||||||
| Indicated | 2,595 | 4.40 | 2.40 | 4.49 | 61.5 | 0.78 |
| Inferred | 1,624 | 2.15 | 1.32 | 1.59 | 35.8 | 0.42 |
| Sumac Deposit (1.05% CuEq cut-off) | ||||||
| Inferred | 9,086 | 1.49 | 1.06 | 1.53 | 16.2 | 0.16 |
| Combined | ||||||
| Measured | 7,213 | 2.31 | 1.64 | 2.35 | 24.7 | 0.36 |
| Indicated | 15,590 | 2.23 | 1.46 | 2.11 | 29.6 | 0.41 |
| Measured + Indicated | 22,802 | 2.26 | 1.52 | 2.18 | 28.1 | 0.39 |
| Inferred | 12,886 | 1.62 | 1.10 | 1.58 | 20.0 | 0.25 |
Notes:
1. The mineral resource estimates in the table above form coherent bodies of mineralisation that are considered amenable to a combination of open pit and underground extraction methods based on the following parameters: Base Case Metal Prices: Copper US$3.50/lb, Zinc US$1.15/lb, Silver US$20.00/oz, Gold US$1600/oz. Projected operating costs: Mining (underground) C$56.58/t, Mining (open pit) C$3.49/t, Processing C$26.97/t, G&A C$7.89/t. Process recoveries Main and Sumac: Copper 87.6%, Zinc 64.3%, Gold 58.0%, Silver 57.9%. Process recoveries Esso: Copper 94.5%, Zinc 89.3%, Gold 66.0%, Silver 71.2%. Pit slope angle 48.9 degrees.
2. Copper-equivalent grades at Main and Sumac are calculated based on the formula: CuEq = (Cu% x 0.876) + (Zn% x 0.241) + (Au g/t x 0.441) + (Ag g/t x 0.006). Copper-equivalent grades at Esso are calculated based on the formula: CuEq = (Cu% x 0.945) + (Zn% x 0.310)+(Ag g/t x 0.006)+(Au g/t x 0.466). The base case cut-off grade for mineral resources considered amenable to open pit extraction methods at the Main deposit is 0.45% CuEq while the cut-off grade for mineral resources considered amenable to underground extraction methods at Main and Sumac deposits is 1.05% CuEq and is 0.95% Cu at the Esso deposit.
3. Mineral resources are not mineral reserves and do not have demonstrated economic viability. These mineral resource estimates include inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. It is reasonably expected that the majority of inferred mineral resources could be upgraded to measured or indicated mineral resource with continued exploration.
4. All figures are rounded to reflect the relative accuracy of the estimate and therefore numbers may not appear to add precisely.
5. The estimate of mineral resources was calculated based on the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions.
6. The effective date of the estimate of mineral resources is July 30, 2021. Kutcho Copper is not aware of political, environmental, or other risks that could materially affect the potential development of the mineral resources.
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Mineral Reserve Estimate
The mineral reserve estimate for the Kutcho project, with an effective date of 4 November 2021, was prepared by CSA Global Pty Ltd and reported in accordance with the National Instrument 43-101. The mineral reserves are estimated using current CIM standards, definitions and guidelines. Mineral reserves for the Project are a subset of the measured and indicated mineral resources. The mineral reserves are inclusive of diluting material that would be mined and delivered to the processing plant, and include suitable discounting to allow for losses typically incurred during mining.
Table 3: Kutcho Project - Mineral Reserve Estimate (effective 4 November 2021)
| Mine Section | Reserve | Material Type | Run of Mine | Diluted Grade | Average NSR | Contained Metal | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Classification | Mt | Cu % | Zn % | Ag g/t | Au g/t | C$/t | Cu Mlbs | Zn Mlbs | Ag Moz | Au koz | ||
| Esso Underground | Probable | Sulphide | 2.23 | 2.14 | 4.13 | 54.9 | 0.71 | $199 | 105.3 | 202.6 | 3.9 | 50.7 |
| Main Underground | Probable | Sulphide | 0.60 | 1.40 | 1.54 | 32.2 | 0.57 | $120 | 18.5 | 20.4 | 0.6 | 11.0 |
| Total Underground | Probable | Sulphide | 2.83 | 1.99 | 3.58 | 50.1 | 0.68 | $183 | 123.8 | 223.0 | 4.6 | 61.7 |
| Main Open Pit | Proven | Oxide | 0.03 | 1.40 | 1.79 | 20.2 | 0.27 | $88 | 0.8 | 1.0 | 0.0 | 0.2 |
| Probable | Oxide | 0.41 | 1.24 | 1.77 | 17.1 | 0.37 | $81 | 11.2 | 16.0 | 0.2 | 4.9 | |
| Proven | Sulphide | 6.80 | 1.64 | 2.38 | 24.5 | 0.37 | $135 | 245.7 | 356.5 | 5.4 | 80.8 | |
| Probable | Sulphide | 7.28 | 1.38 | 1.78 | 23.0 | 0.29 | $112 | 221.8 | 285.7 | 5.4 | 67.1 | |
| Total Open Pit | Proven & Probable | Sulphide & Oxide | 14.51 | 1.50 | 2.06 | 23.5 | 0.33 | $122 | 479.5 | 659.3 | 11.0 | 153.0 |
| Open Pit and Underground | Proven | Oxide | 0.03 | 1.40 | 1.79 | 20.2 | 0.27 | $88 | 0.8 | 1.0 | 0.0 | 0.2 |
| Probable | Oxide | 0.41 | 1.24 | 1.77 | 17.1 | 0.37 | $81 | 11.2 | 16.0 | 0.2 | 4.9 | |
| Proven | Sulphide | 6.80 | 1.64 | 2.38 | 24.5 | 0.37 | $135 | 245.7 | 356.5 | 5.4 | 80.8 | |
| Probable | Sulphide | 10.11 | 1.55 | 2.28 | 30.6 | 0.40 | $132 | 345.5 | 508.7 | 9.9 | 128.8 | |
| Total Reserves | Proven & Probable | Sulphide & Oxide | 17.34 | 1.58 | 2.31 | 27.9 | 0.39 | $132 | 603.2 | 882.3 | 15.5 | 214.7 |
Notes:
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Resources are reported inclusive of Mineral Reserves.
3. The Inferred Mineral Resource does not contribute to the financial performance of the Project and is treated in the same way as waste.
4. Sum of individual amounts may not appear to equal the totals due to rounding.
5. Metal prices - copper US$3.50/lb, zinc US$1.15/lb, silver US$20/oz, and gold US$1,600/oz.
6. No previous mining has occurred at the Project site.
7. The reference point at which the Mineral Reserves are defined is where the ore is delivered to the crusher.
8. There is no known likely value of the following factors of mining, metallurgical, infrastructure, permitting or other relevant factor that could materially affect the estimate.
9. A complex NSR formula has been applied that varies for oxide and sulphide rock types and also varies for head grade and is fully documented within the NI43-101 Technical Report of the Feasibility Study.
9a. The oxide NSR formula can be approximated to +/- 1% accuracy for average head grades as: NSR ($/t) = 50.26 x Cu% + 7.09 x Zn% + 0.14 x Ag_gpt + 8.94 x Au_gpt.
9b. The sulphide NSR formula can be approximated to +/- 1% accuracy for average head grades as: NSR ($/t) = 57.82 x Cu% + 9.94 x Zn% + 0.34 x Ag_gpt + 22.52 x Au gpt.
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Underground Specific Notes:
10. Underground Mineral Reserve cut-off grade was C$129.45/t NSR.
11. The minimum pre-dilution mineable width applied was 2.5m, average stope dimensions of 25m height, 13.1m wide and length of 42m and a minimum footwall dip of 47 degrees.
12. A 0.75m footwall and a 0.75m hanging wall dilution is applied and wall dilution grades were taken from estimated block grades in these locations.
13. A net mining recovery and mining loss estimate after wall dilution was estimated as +2.2% tonnage and -6.2% grade.
14. Total net mining dilution, recovery and mining loss of the Mineral Resource is estimated at 0.34Mt (+12.0%) tonnes at 0.50% Cu, 1.13% Zn, 13 gpt Ag, and 0.12 gpt Au.
15. All stopes included in the Mineral Reserve were optimized to maximise net cashflow and must be cashflow positive including access capital.
Open Pit Specific Notes:
16. Open Pit Mineral Reserve cut-off grade was C$38.40/t NSR for oxide and C$55.00/t NSR for sulphide. The sulphide grade is an operational cut-off and is above the break-even cut-off of C$38.40/t NSR.
17. Mineral resource between the break even and operational cut-off not included in the Mineral Reserve amounts to 1.24 Mt at 0.53% Cu, 0.63% Zn, 9.6 gpt Ag and 0.13 gpt Au (Measured and Indicated).
18. The mining SMU is 5m x 5m x 5m. All ore is diluted to this block dimension and is considered the minimum recoverable dimension for the mining equipment and mining method selected.
19. Average dilution is estimated as 1.17Mt (+8.1% of Mineral Reserve total) tonnes and grades are taken from waste materials, estimated as 0.12% Cu, 0.13% Zn, 1.0 gpt Ag and 0.08 gpt Au.
20. Mining loss for material above the operational cut-off is estimated as 0.79 Mt (2.6% of Mineral Reserve total) at a grade of 0.91% Cu, 0.98% Zn, 4.8 gpt Ag and 0.53 gpt Au.
21. The Open Pit Mineral Reserve lies within a pit design that is supported by geotechnical drilling and studies and optimized for net present value.
Considerations
British Columbia, Canada is a stable geopolitical region with a well-understood mining regulatory regime and rule of law. There are no known legal, political, environmental, or other risks that could materially affect the potential development of the mineral resources or mineral reserves. Reporting and modelling of financial results were evaluated in H2/2021 and terminated 5 November 2021 (the reserve statement effective date). The NSR method was used to determine mineral reserves and considers on-site operating costs, selling costs, geotechnical analysis, metallurgical recoveries, allowances for mining recovery and dilution, and overall economic viability as detailed in the Feasibility Study.
Project Development and Closure Plan
Development of the Project would comprise the construction, operation, and closure of an open pit and underground mining operation with associated processing and ancillary surface structures. Excluding the access road, the mine would have a two-year construction period (including commissioning) and a 10.75-year operational life. A small amount of ore would be mined and processed towards the end of the construction period.
The existing 120 km long Boulder Trail access road from Highway 37 would be upgraded to accommodate construction vehicles and trucks transporting consumables, services and concentrate. Road construction activities would commence approximately three years prior to mine commissioning and would include upgrading of the existing road surface, realignment along small sections, and the construction of clear-span bridges and culverts to facilitate creek crossings.
Construction of the mine site infrastructure would commence one and three quarter years before plant commissioning. This would include construction of the Main and Esso underground mines’ shared portal, and waste development to access, initially, the Main underground mine and, subsequently, the Esso underground mine. Approximately 23% of the nPAG waste rock from the pit would be used for the construction of the tailings management facility. The open pit mine plan maximises direct backfill of PAG waste rock into completed parts of the pit when available. Any excess PAG waste rock would be stored in a discrete area of the surface waste rock stockpile that will be underlain by buffering nPAG waste. The plan also includes the development of a low-grade ore stockpile which would be consumed after termination of open pit mining. During this final operational rehandle phase of the Project the surface PAG waste stockpile would be returned to the open pit and capped by -9- nPAG waste. The mine plan and rehabilitation strategy are an integrated package and important outcomes of that strategy would be that no PAG rocks are to remain outside of the pit area after closure. The waste rock rehandle strategy will produce a final landform that promotes water runoff, and the placement of all PAG material to the lower depths of the open pit mine.
Power for the operation would be provided by four 2.5 MW LNG generators plus one on standby. A 2 MW diesel generator would provide occasional plant start-up assistance.
In order to minimise potential environmental effects, no infrastructure is located within fish-bearing streams. All contact water would be treated prior to discharge to the environment to ensure adherence to provincial and federal water quality guidelines.
At closure, all buildings would be removed, disturbed lands rehabilitated, and the property returned to functional use according to as yet to be developed and approved reclamation plans and accepted practices at the time of closure. By closure the open pit is planned to be almost completely backfilled; topsoiling and revegetation will follow. The TMF would be capped with nPAG waste rock and revegetated. Contact water discharged into the environment would be treated until water qualities meet discharge criteria. It is anticipated that the site's active and passive post-closure environmental management would continue for approximately eight to ten years after closure. However, provision is made for 25 years of active water treatment and a total of thirty years of monitoring.
Mining
Mining is expected to be conducted by conventional shovel and truck open pit and underground LLHOS methods. Open pit mining at Main is expected to commence during the construction period and ramps up over a two-year period before reaching an estimated average steady production rate of 1.8 Mtpa of ore at the end of Year 2. The open pit has an estimated eight-year life with a total of 14.5 Mt of ore mined at an average strip ratio of 5.6:1.
Figure 3: Ore by Source and NSR
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Underground mine development is expected to commence two years before production. A single portal would be used to access both the Main and Esso ore bodies. Access to the Main underground mine would be via an initial 340 m long decline. The Main underground mine would be located beneath the Main open pit and is separated from it by a crown pillar. The top of the Esso deposit is approximately 400 m below surface and would be accessed by an 1,800 m decline extending from the Main ramp. Further decline ramps are required to access the production stopes in the Main and Esso mines.
Underground mining of both the Main and Esso deposits is expected to be by longitudinal long-hole open stoping. The stopes would be backfilled using cemented rock fill (mostly ore sorter reject from the processing plant) and are planned to utilize temporary rib pillars and cable bolting as primary stope support measures. The underground portion of the Main deposit is expected to have a three-year mine life, extending from Year -1 to Year 2. Total ore production from Main underground would be 0.6 Mt at an average rate of 600 tpd. Underground mining of the Main deposit would be completed early in the life of the open pit with minimal interference between the two operations anticipated. The 25 m crown pillar is not planned for recovery.
Production from the Esso deposit is expected to commence in Year 2 and ramp up to full production in the following year. Total projected ore production from Esso is 2.2 Mt at a steady state average rate of 0.3 Mtpa or 860 tpd. At these production rates, mine life for Esso is estimated at nine years. As reflected in Table 3, Esso ore contains higher average grades of copper and zinc than the Main deposit. Consequently, even at the higher cost of underground mining, ore production from Esso would be scheduled as early as possible.
The mine schedule is expected to allow for the stockpiling of low grade ore from the open pit throughout operations, allowing higher grades to be processed earlier. The lower grade stockpiles would be processed in the final years of mine life (commencing in Year 8, but primarily from Year 9 through Year 11).
Table 4: Kutcho Project - Open Pit and Underground Mining Statistics (Incl Pre-Production)
| Activity | Units | Pre- Production | Early Production | Steady State | Stockpile | Total |
|---|---|---|---|---|---|---|
| Years -2 to -1 | Year 1 | Years 2 to 8 | Years 9 to 11 | |||
| UNDERGROUND | ||||||
| Ore Mined | Mt | 0.15 | 0.32 | 2.09 | 0.27 | 2.83 |
| Ore Mined(1) | tpd | 327 | 865 | 817 | 602 | 738 |
| Mining Cost | C$/t ore mined | $92.40 | $67.67 | $57.88 | $25.61 | $57.66 |
| Mine Life (excl pre-production) | Years | 10.5 years | ||||
| OPEN PIT | ||||||
| Ore Mined | Mt | 0.5 | 1.6 | 12.4 | 0.0 | 14.5 |
| Waste Mined | Mt | 11.5 | 12.1 | 58.2 | 0.0 | 81.8 |
| Strip Ratio | W:O | 22.8 | 7.7 | 4.7 | 0.0 | 5.6 |
| Ore Rehandle | Mt | 0.0 | 0.0 | 0.9 | 3.8 | 4.7 |
| Waste Rehandle (Backfill) | Mt | 0.0 | 0.0 | 5.1 | 26.5 | 31.6 |
| Total Movement | Mt | 12.0 | 13.7 | 76.6 | 30.3 | 132.5 |
| tpd | 16,400 | 37,562 | 29,978 | 27,645 | 27,934 | |
| Mining Cost | C$/t moved | $4.94 | $3.33 | $3.33 | $1.57 | $3.07 |
| C$/t ore mined | $117.28 | $28.93 | $20.55 | na | $28.10 | |
| Mine Life (excl pre-production) | Years | 8.0 Years |
1. Includes 1.25 years for pre-production and stockpile rehandle periods
2. Mining operational costs and tonnages are inclusive of the pre-production period.
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Metallurgy & Processing
The process flowsheet is based on both historical test work and more recent test work carried out under the direction of Kutcho Copper between 2018 and 2021. The ore grade profile reflects the processing of high grade ore when available, and stockpiling of low grade ore for processing in the later years of mine life.
Figure 4: Kutcho Project – Flotation Feed Grades
After crushing, ore >12.5 mm would report to an XRT (X-ray transmission) ore sorting circuit. Ore sorting is based essentially on density and an estimated 15% of the ore reporting to the ore sorter would be rejected, with an overall 12.5% reduction of feed to the milling and flotation circuit. Ore sorter rejects would be used for the underground cemented rock fill. Ore would report to the SAG and ball mill for primary sizing to a P80 of 55µm. Metal recovery is based on the sequential flotation of copper minerals, followed by flotation of zinc minerals. The flotation process uses sulphur dioxide-based reagents for the initial depression of zinc and pyrite in the copper flotation circuit, followed by the re-activation of zinc for the zinc flotation stage using specific collector and frother reagents. The copper rougher concentrate is reground (P80 of 15µm) and upgraded in one cleaner stage to produce a final copper concentrate. The zinc rougher concentrate is reground (P80 of 20µm) and upgraded in three cleaner stages to produce a final zinc concentrate. The flotation tailings would be dewatered, after which they would be pumped to the TMF for storage.
The copper and zinc concentrate grades are anticipated to vary based on the proportion of Main and Esso deposit material being mined, blended, and processed. Respective mass pulls are estimated to be 6.2% and 3.6% (dry tonnage). Gold and silver are contained in both the copper and zinc concentrates. The concentrates would be dewatered by thickening and filtration to reduce the moisture content to about 9%. Concentrates would be loaded separately onto trucks, sampled, and despatched to Stewart, BC, a distance of 510 km, for onward shipping to international smelters and refiners.
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