Northwest Copper Announces Positive PEA for the Kwanika-Stardust Copper-Gold Project, Describing a Low Capex Project with Scale
News Release
NORTHWEST COPPER ANNOUNCES POSITIVE PEA FOR THE KWANIKA-STARDUST COPPER-GOLD PROJECT, DESCRIBING A LOW CAPEX PROJECT WITH SCALE
Vancouver, BC – January 5, 2023 – NorthWest Copper Corp. (“NorthWest” or “the Company”) (TSX-V: NWST) (OTCQX: NWCCF) is pleased to announce the results of the preliminary economic assessment (“2023 PEA”), conducted by Ausenco Engineering Canada Inc. (“Ausenco”) and Mining Plus Canada Consulting Ltd (“Mining Plus”), on its 100% owned Kwanika-Stardust Project comprising the Kwanika and Stardust deposits (the “Project”). This represents the first technical and economic evaluation of the combined deposits outlining a robust project with manageable initial capital cost and multiple opportunities for project growth. NorthWest plans to continue to evaluate the possibility of further synergies with nearby deposits and the proposed Project infrastructure, with a particular focus on the nearby 100% owned Lorraine Project1.
The 2023 PEA outlines a project that proposes mining approximately 96 million tonnes (“Mt”) of material in a combination of open pit and underground operations from the Company’s 100% owned Kwanika and Stardust deposits. The 2023 PEA contemplates a 22,000 tonnes per day (“tpd”) process plant, producing high-quality copper concentrate with significant gold and silver by-product credits.
Highlights
- The 2023 PEA describes Kwanika-Stardust as a unique project combining manageable initial capital with a significant Cu-Au production profile:
- Peak copper equivalent (“CuEq”2) production of 152.1 million pounds of copper (“Mlbs”) per year (year 6) and life of mine (“LOM”) CuEq average production of 90.6 Mlbs per year over 11.9 years;
- Total LOM production of 694 Mlbs Cu, 803 koz Au, and 3,204 koz Ag (1,078 Mlbs CuEq)
- Average cash operating costs3 of US$1.58/lb CuEq (US$0.44/lb Cu on a by-product4 basis);
- Average all-in sustaining cost (“AISC”)5 of US$2.01/lb CuEq (US$1.12/lb Cu on a byproduct6 basis);
- Initial capital of C$567.9 M (US$438.5 M7), with a construction period of two years;
- Attractive economics with NPV (7%) of C$440.1 M (US$339.8 M) and IRR of 17.1% pre-tax and NPV (7%) of C$215.0 M (US$166.0 M) and IRR of 12.7% after tax8; and
1 See NI 43-101 technical report titled “Lorraine Copper-Gold Project NI 43-101 Report & Mineral Resource Estimate Omineca Mining Division, B.C,” dated September 12, 2022 with an effective date of June 30, 2022, filed under the Company’s SEDAR profile at www.sedar.com .
2 CuEq (lbs) = Cu (lbs) + (Au (koz) * Au ($/oz)) / Cu ($/lb) /1000 + (Ag (koz) * Ag ($/oz)) / Cu ($/lb) / 1000, US$3.63 Cu, US$1,650 Au, US$21.50 Ag 3 Cash operating cost on a Co-product basis, calculated with the following formula: (Site Operating Costs) / LOM CuEq (Mlbs), Site Operating Costs = C$23.04 (per tonne processed)*95,607 kt*0.77 (USD exchange rate).
4 Cash operating cost on a By-product basis, calculated with the following formula: (Site Operating Costs – LOM Gold Revenue – LOM Silver Revenue) / LOM Cu (Mlbs), LOM Gold Revenue = US$1,321.55M, LOM Silver Revenue = $US 68.53M.
5 AISC Co-product basis, calculated with the following formula: (Site Operating Costs + Treatment, Refining, Transport Costs+ Sustaining Capital + Closure Costs – Salvage Value) / LOM CuEq (Mlbs), Treatment, Refining, Transport Costs = US$220.96M, Sustaining Capital = C$282.46M*0.77, Closure Costs = US$32.26M, Salvage Value = US$1.89M.
6 AISC By-product basis, calculated with the following formula: (Site Operating Costs + Treatment, Refining, Transport, + Sustaining Capital + Closure Costs – Salvage Value – LOM Gold Revenue – LOM Silver Revenue) / LOM Cu (Mlbs)
7 0.77 US$ per C$1.00 8 Economics calculated at US$3.63 Cu, US$1,650 Au, US$21.50 Ag
- At spot prices economics improve, with NPV (7%) of C$665.6 M (US$513.9 M) and IRR of 21.7% pre-tax and NPV (7%) of C$363.3 M (US$280.6 M) and IRR of 16.4% after tax9;
- The 2023 PEA is preliminary in nature. It includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the 2023 PEA will be realized.
- Mineral Resources include mineralized material from four sources:
- Kwanika Central open pit:
- 30.7 Mt of Measured Resources (0.31% Cu, 0.31 g/t Au, 1.05 g/t Ag);
- 35.9 Mt Indicated Resources (0.22% Cu, 0.19 g/t Au, 0.80 g/t Ag); and
- 4.1 Mt Inferred Resources (0.15% Cu, 0.15 g/t Au, 0.58 g/t Ag);
- Kwanika Central underground block cave:
- 25.6 Mt Measured Resources (0.50% Cu, 0.61 g/t Au, 1.62 g/t Ag); and
- 11.3 Mt Indicated Resources (0.51 Cu%, 0.65 g/t Au, 1.56 g/t Ag);
- Kwanika South open pit:
- 25.4 Mt Inferred Resources (0.28 % Cu, 0.06 g/t Au, 1.68 g/t Ag);
- Stardust underground:
- 1.6 Mt Indicated Resources (1.49% Cu, 1.63 g/t Au, 30.1 g/t Ag); and
- 4.1 Mt Inferred Resources (1.00% Cu, 1.38 g/t Au, 22.8 g/t Ag);
- Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
- NorthWest is committed to working collaboratively with First Nations to ensure that sound cultural and environmental practices based on sustainability and shared value are incorporated into any mine development plans:
- NorthWest will continue to engage based on open communication and collaboration to create benefits for First Nations;
- The Project will look to minimize the development impact by using existing infrastructure and processing mineralized material from multiple sources in one central facility;
- The Project plans to connect to the BC Hydro electrical grid and will thereby use primarily renewable electricity, reducing the Project’s carbon footprint; and
- The Project could contribute to British Columbia’s and Canada’s critical mineral supply by providing copper, a much-needed element for the green energy transition.
9 Spot price economics calculated at US$3.83 Cu, US$1,840 Au, US$23.97 Ag (as at January 3, 2023)
Table 1: Summary Project Metrics
| Production Per Year | AISC | Economics | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cu (Mlbs) | Au (koz) | Ag (koz) | CuEq10 (Mlbs) | Cu (US$/lb) | CuEq (US$/lb) | Initial Capital (C$M) | Total Operational11 ATCF (C$M) | After- Tax NPV-7 (C$M) | After- Tax IRR % | ||||
| LOM Average | 58.31 | 67.43 | 269.12 | 90.56 | $1.12 | $2.01 | $567.90 | $1,324.98 | $215.04 | 12.7% |
“This study is a major step in demonstrating the value created by combining Kwanika and Stardust, the cornerstone deposits of the NorthWest portfolio,” stated President and CEO Peter Bell. “We have been describing a project with manageable initial capital and significant copper production to the market since creating the Company in 2021. This PEA supports that vision. We are also now working towards advancing the Project including exploring whether the nearby 100% owned Lorraine Project, located approximately 40 km away, can be developed with the infrastructure contemplated in the Kwanika-Stardust PEA. Conducting the necessary studies to ascertain whether Lorraine can be incorporated into the Kwanika- Stardust project will be the main objective of the Company in 2023, as we believe that this will add further value to the strong project we have outlined with this PEA.”
“The focus in Canada is turning to critical minerals, including copper,” continued Mr. Bell. “Our project is extremely well located, has both meaningful scale and manageable capex, benefits from existing infrastructure, has access to renewable power and is in a Tier 1 jurisdiction making it rare and highly valuable. We look forward to working collaboratively with First Nations to advance the project as part of BC and Canada’s push for critical Canadian copper production.”
The Company will host a conference call and webcast on Thursday, January 5, 2023 at 11:30 AM Eastern time (8:30 AM Pacific time). Details to access the call can be found below.
Mineral Resources
Mineral Resources for Kwanika have been updated with parameters from the 2023 PEA. Stardust is also updated to reflect refined operating and capital costs. Mineral Resources at Kwanika Central are 95% in the Measured and Indicated categories, reflecting the amount of drilling and geological data that have been completed in this area. Kwanika South and Stardust represent areas for both further growth of Mineral Resources as well as conversion of Inferred Resources to Measured and Indicated Resources. The quantity of mineralized material was estimated and included in the mine plan using a Net Smelter Return (“NSR”) threshold approach, alternately called economic cut off, rather than a copper cut-off grade.
10 CuEq (lbs) = Cu (lbs) + (Au (koz) * Au ($/oz)) / Cu ($/lb) /1000 + (Ag (koz) * Ag ($/oz)) / Cu ($/lb) / 1000, US$3.63 Cu, US$1,650 Au, US$21.50 Ag 11 Operational after tax cash flow (“ATCF”) is defined as Total Revenue – Site Operating Costs - Treatment, Refining, Transport Costs - Sustaining Capital -Growth Capital - Closure Costs - Taxes + Salvage Value) , Total Revenue = C$5,068.04M, Site Operating Costs = C$2,202.87M, Treatment, Refining, Transport Costs = C$286.96M, Sustaining Capital = C$282.46M, Growth Capital = $493.27M, Closure Costs = C$41.90M, Taxes = C$438.06M, Salvage Value = C$2.46M.
Table 2: Combined summary resource estimate12
| Kwanika Central | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Open Pit | Economic Cut-Off US$/t | Classification | Tonnes (Mt) | Cu (%) | Au (g/t) | Ag (g/t) | Cu (Mlbs) | Au (koz) | Ag (koz) | ||||||||
| 8.21 | Measured | 30.7 | 0.31 | 0.31 | 1.05 | 210.8 | 310.5 | 1,041.7 | |||||||||
| Indicated | 35.9 | 0.22 | 0.19 | 0.80 | 174.9 | 222.0 | 923.9 | ||||||||||
| M&I | 66.6 | 0.26 | 0.25 | 0.92 | 385.7 | 532.5 | 1,965.6 | ||||||||||
| Inferred | 4.1 | 0.15 | 0.15 | 0.58 | 13.8 | 20.1 | 77.3 | ||||||||||
| Underground | Economic Cut-Off US$/t | Classification | Tonnes (Mt) | Cu (%) | Au (g/t) | Ag (g/t) | Cu (Mlbs) | Au (koz) | Ag (koz) | ||||||||
| 16.41 | Measured | 25.6 | 0.50 | 0.61 | 1.62 | 284.4 | 501.3 | 1,332.6 | |||||||||
| Indicated | 11.3 | 0.51 | 0.65 | 1.56 | 126.2 | 236.7 | 565.1 | ||||||||||
| M&I | 36.8 | 0.51 | 0.62 | 1.60 | 410.6 | 738.0 | 1,897.8 | ||||||||||
| Inferred | - | - | - | - | - | - | - | ||||||||||
| Kwanika South | |||||||||||||||||
| Open Pit | Economic Cut-Off US$/t | Classification | Tonnes (Mt) | Cu (%) | Au (g/t) | Ag (g/t) | Cu (Mlbs) | Au (koz) | Ag (koz) | ||||||||
| 8.21 | Inferred | 25.4 | 0.28 | 0.06 | 1.68 | 155.0 | 52.4 | 1,373.9 | |||||||||
| Stardust | |||||||||||||||||
| Underground | Economic Cut-Off US$/t | Class | Tonnes (Mt) | %Cu | g/t Au | g/t Ag | Cu | Au | Ag | ||||||||
| (Mlbs) | (koz) | (koz) | |||||||||||||||
| 88.00 | Indicated | 1.6 | 1.49 | 1.63 | 30.1 | 52.2 | 83.1 | 1,536.4 | |||||||||
| Inferred | 4.1 | 1.00 | 1.38 | 22.8 | 90.0 | 181.1 | 3,004.3 |
2023 PEA Summary
The 2023 PEA includes capital and operating costs for a potential Kwanika-Stardust mine; as well as recovery assumptions, metal prices and a mine plan for the combined Project. The 2023 PEA was developed in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) by Ausenco and Mining Plus, using historical and the latest 2022 metallurgical testing data performed by SGS Minerals, ALS Metallurgy, Bureau Veritas Commodities, and Base Metallurgical Laboratories Ltd (“Base Met”), with further details on the historic data used shown in the Database section below. The Company plans to file the complete 2023 PEA NI 43-101 technical report under the Company’s SEDAR profile at www.sedar.com within 45 days of this news release.
The 2023 PEA will supersede the previous PEA on the Kwanika deposit13 and updates the previous Mineral Resource estimate on the Kwanika deposit14. The 2023 PEA also updates the previous Mineral Resource estimate on the Stardust deposit15. The table below summarizes the key findings of the 2023 PEA.
12 Please see end of the release for notes to the Mineral Resource Estimate. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability 13 See NI 43-101 technical report titled “NI 43-101 Technical Report for the Kwanika Project Preliminary Economic Assessment Update 2017,” dated April 28, 2017 with an effective date of April 3, 2017, filed under the Company’s SEDAR profile at www.sedar.com.
14 See NI 43-101 technical report titled “NI 43-101 Technical Report for the Kwanika Project Resource Estimate Update 2019,” dated April 17, 2019, filed under the Company’s SEDAR profile at www.sedar.com.
15 See NI 43-101 technical report titled “Stardust Project Updated Mineral Resource Estimate NI 43-101 Technical Report Omineca Mining Division, British Columbia,” dated July 2, 2021 with an effective date of May 17, 2021, filed under the Company’s SEDAR profile at www.sedar.com.
Table 3: 2022 PEA Economic Highlights
| Base Case Economics | Units | Pre-Tax | After-tax | ||||
|---|---|---|---|---|---|---|---|
| NPV (7%) | C$M | $440.10 | $215.04 | ||||
| NPV (7%) | US$M | $339.83 | $166.05 | ||||
| IRR | % | 17.1% | 12.7% | ||||
| Initial Capital | C$M | $567.90 | |||||
| Sustaining Capital | C$M | $282.43 | |||||
| Growth Capital16 | C$M | $493.27 | |||||
| Economic Assumptions | Units | Base Case | |||||
| Copper | US$/lb | $3.63 | |||||
| Gold | US$/oz | $1,650.00 | |||||
| Silver | US$/oz | $21.50 | |||||
| Financial Metrics | Units | LOM | |||||
| Average Annual Revenue | C$M | $425.70 | |||||
| Average Annual Operating Costs | C$M | $185.03 | |||||
| Avg. Ann. Free Cash Flow (after tax) | C$M | $111.29 |
The 2023 PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the Project described in the 2023 PEA will be realized. Table 4 provides a summary of key operating metrics from the 2023 PEA:
Table 4: 2023 PEA Operating Highlights
| Operating Statistics | Units | Avg. LOM | |||
|---|---|---|---|---|---|
| Mine Life | Years | 11.9 | |||
| Tonnes Processed | ktpa | 7,967.3 | |||
| Strip Ratio17 | W:O | 1.79 | |||
| Production (per year) | |||||
| Copper | Mlbs | 58.31 | |||
| Gold | koz | 67.43 | |||
| Silver | koz | 269.12 | |||
| CuEq | Mlbs | 90.56 | |||
| Recoveries – Open Pit | |||||
| Copper | % | 84.3 | |||
| Gold | % | 60.0 | |||
| Silver | % | 57.8 | |||
| Recoveries – Underground |
16 Growth Capital is capital associated with brining new areas of mineralized material into production – namely Kwanika underground block cave and Stardust underground 17 Strip Ratio only accounts for the mineralized material and waste mined from the Kwanika Central open pit and the Kwanika South open pit. The strip ratios including mineralized material mined from underground is 0.91.
| Operating Statistics | Units | Avg. LOM | ||
|---|---|---|---|---|
| Copper | % | 89.7 | ||
| Gold | % | 71.4 | ||
| Silver | % | 70.3 | ||
| Operating Costs | ||||
| Cash Cost – Cu with by-products | US$/lb | $0.44 | ||
| Cash Cost – CuEq | US$/lb | $1.58 | ||
| AISC – Cu with by-products | US$/lb | $1.12 | ||
| AISC – CuEq | US$/lb | $2.01 |
Economic Sensitivity
Tables 5 and 5a below summarizes the pre-tax and after-tax sensitivities of NPV and IRR to metal prices:
Table 5 – Economic Sensitivity to Metal Prices (C$M, pre-tax)18
| Metal Prices | NPV (5%) | NPV (7%) | NPV (10%) | IRR (%) | ||||
|---|---|---|---|---|---|---|---|---|
| Spot | $860.83 | $665.55 | $439.95 | 21.7% | ||||
| 52 Week high | $1,490.45 | $1,207.90 | $878.64 | 31.9% | ||||
| Base Case + 20% | $1,281.04 | $1,027.91 | $733.40 | 28.6% | ||||
| Base Case + 10% | $940.35 | $734.01 | $495.28 | 23.0% | ||||
| Base Case | $599.67 | $440.10 | $257.16 | 17.1% | ||||
| Base Case – 10% | $258.99 | $146.19 | $19.04 | 10.6% | ||||
| Base Case – 20% | -$81.70 | -$147.72 | -$219.08 | 3.1% |
Table 5a – Economic Sensitivity to Metal Prices (C$M, after tax)
| Metal Prices | NPV (5%) | NPV (7%) | NPV (10%) | IRR (%) | ||||
|---|---|---|---|---|---|---|---|---|
| Spot | $499.11 | $363.32 | $207.06 | 16.4% | ||||
| 52 Week high | $904.75 | $715.05 | $494.60 | 24.7% | ||||
| Base Case + 20% | $769.84 | $598.31 | $399.37 | 22.0% | ||||
| Base Case + 10% | $550.47 | $407.87 | $243.51 | 17.5% | ||||
| Base Case | $329.13 | $215.04 | $84.88 | 12.7% | ||||
| Base Case – 10% | $104.23 | $18.12 | -$78.27 | 7.5% | ||||
| Base Case – 20% | -$129.04 | -$187.15 | -$249.39 | 1.9% |
Sustainability
Advancement of the Kwanika-Stardust Project is aligned with supplying critical mineral production, especially copper, in Canada. Collaboration with First Nations is a key part of our effort. The Project would be designed to have meaningful metal production while minimizing the Project’s environmental footprint.
The Project is in an area of British Columbia with existing infrastructure, hydroelectric power and a local workforce supporting our programs. Environmental, social and governance (ESG) performance is core to NorthWest’s longer-term goal to contribute to sustainable economies and encourage and promote
18 Base Case Prices US$ 3.63 Cu, US$1,650 Au, US$21.50 Ag, Spot Prices as at January 3, 2023 (US$3.83 Cu, US$1,840 Au, US$23.97 Ag), 52 Week Cu price high (US$4.94 Cu, US$ 1,790 Au, US$ 23.27 Ag)
cultural and environmental stewardship. The Company has taken a step towards our goals by completing a comprehensive 2021 ESG report19 in 2022, which gives NorthWest a strong baseline to track and demonstrate ESG progress.
Development of the Project may create many opportunities to bring needed resources to meet the demands of society and the changing economy. However, development of the Project will also impact the environment, First Nations and local communities. There are opportunities to build on traditional and local knowledge to manage these potential impacts and to put systems in place that support a better understanding of the land, and to encourage and support stewardship. In addition, by working collaboratively with First Nation communities and leadership we see opportunities to build and support the development of stronger local economies.
NorthWest envisions a future of shared values, where partnerships with local communities drive a new kind of mining where the rights of First Nations are recognized and stewardship of the environment and cultural heritage form the foundation of future development. As a Company we will strive to pursue best practices as we advance the Project beyond the 2023 PEA.
Next Steps
With completion of the 2023 PEA, NorthWest intends to continue to advance its portfolio of projects. Key next steps are expected to include:
- Conducting the necessary studies at both Kwanika-Stardust and Lorraine to ascertain whether the projects could potentially be combined. This will require further work, including metallurgical test work, transportation studies, general engineering and geological modeling before the Lorraine Project could be considered for combination with the Project. The Company anticipates completing metallurgical test work on both the Kwanika-Stardust and Lorraine projects, including:
- Work at Kwanika-Stardust to optimize recovery with a focus on improving recovery of gold and silver; and
- Work at the nearby Lorraine Project will focus on determining recovery and exploring the possibility of processing mineralized material from Lorraine at the proposed Kwanika- Stardust process facility;
- Exploration with a focus on Lorraine, including areas around the current resource area and on the larger property;
- Exploration at Kwanika-Stardust to test high-grade drill targets;
- NorthWest will continue to proactively engage with First Nations in our geographic area in support of the responsible development of the Project;
- Develop plans:
- For baseline environmental testing and scoping work in advance of a potential future environmental assessment (EA) submission; and
- To conduct an energy audit to ensure that the Project is employing current available technologies and best practices to drive lower carbon emissions. Items studied are
19 The Company’s 2021 ESG Report can be found here: https://northwestcopper.ca/investors/annual-esg-report/ expected to include electrification of the mine fleet and equipment, alternative methods of haulage and more energy efficient process plant operation.
Opportunities
In addition, to the next steps noted above, the Company is actively exploring several additional opportunities which the Company hopes will enhance Project value. These include:
- Potentially adding additional mineralized material to the mine plan at Kwanika-Stardust through additional exploration and drilling;
- Further metallurgical test work on mineralized material from Kwanika-Stardust to optimize metallurgical recoveries;
- Further engineering and trade-off studies on Kwanika-Stardust to reduce capital and operating costs and improve operating efficiency;
- Further analysis with respect to optimizing shipping and transportation costs;
- The Company anticipates relying, to the extent feasible, on clean electricity. Further studies exploring the potential for a ‘net-zero’ emissions mine at Kwanika-Stardust, resulting in a differentiated project with regulators, investors and local stakeholders;
- Molybdenum is present at Kwanika South at elevated concentrations20. Further study is required to determine if the addition of a molybdenum circuit could add value to the Project.
Webcast Details
The Company will host a conference call on Thursday, January 5, 2023 at 11:30 AM Eastern time (8:30 AM Pacific time).
- Via telephone, by calling 1-604-638-5340 or 1-800-319-4610
- Via webcast at: https://services.choruscall.ca/links/northwestcopper202301.html
The webcast will be archived for 90 days following the call at the above-noted link.
Mining
Preliminary mine designs have been developed for the Project based upon the Mineral Resource estimates for Kwanika-Stardust. Resource models were imported to Minesight® mine planning software where a Lerch Grossman algorithm was applied to a NSR model to determine possible open pit limits.
The mine plan was developed to mine 95.6 Mt of mineralized material and 86.9 Mt of waste over the LOM (shown in Figure 1). Mineralized material will be mined from four areas: Kwanika Central open pit (years 1-4), Stardust underground (years 4-9), Kwanika Central underground block cave (years 4-12) and Kwanika South open pit (years 9-12). Further detail on the Kwanika Central open pit and underground is shown in Figures 2 and 3, the underground development plan at Stardust is shown in Figure 4, and detail on the Kwanika South open pit is shown in Figure 5.
20 See NI 43-101 technical report titled “NI 43-101 Technical Report for the Kwanika Project Resource Estimate Update 2019,” dated April 17, 2019, filed under the Company’s SEDAR profile at www.sedar.com.
Table 6: Key mining statistics
| Metric | Units | Quantity | |||
|---|---|---|---|---|---|
| Mine Life | Years | 11.9 | |||
| Milling Rate | tpd | 22,000 | |||
| Strip Ratio21 | W:O | 1.79 | |||
| Total Tonnage Mined | kt | 182,533 | |||
| Total Mineralized Material Mined | kt | 95,607 | |||
| LOM Average Grades | |||||
| Copper | % | 0.39 | |||
| Gold | g/t | 0.39 | |||
| Silver | g/t | 2.21 | |||
| CuEq22 | % | 0.62% |
Table 6a: Mining Detail
| Description | Mineralized | Waste (Mt) | |
|---|---|---|---|
| Material (Mt) | |||
| Kwanika Central Open Pit | 29.41 | 55.21 | |
| Kwanika South | 19.05 | 31.71 | |
| Kwanika Block Cave | 44.04 | - | |
| Stardust | 3.11 | - | |
| Total | 95.61 | 86.93 |
The total resources processed in the conceptual mine plan are shown in the following tables. The quantity of mineralized material was estimated and included in the mine plan using an NSR threshold approach, rather than a copper cut-off grade. Mine operating costs are summarized in Table 7.
Table 7: Mining Costs
| Area | Kwanika Central | Kwanika | Stardust | Kwanika South | |||
|---|---|---|---|---|---|---|---|
| Open Pit (C$/t | Underground (C$/t | Underground (C$/t | Open Pit (C$/t | ||||
| mined) | mined) | mined) | mined) | ||||
| Total Mining Cost | 2.88 | 10.62 | 111.32 | 2.95 |
Processing
The 2023 PEA contemplates a concentrator and related facilities processing mineralized material at a nominal rate of 22,000 tpd through a grinding circuit comprising one SAG mill and one ball mill, flotation
21 Strip Ratio only accounts for the mineralized material and waste mined from the Kwanika Central open pit and the Kwanika South open pit. The strip ratios including mineralized material mined from underground is 0.91.
22 %CuEq is calculated for each year, then a weighted average is applied. Exact recoveries were used for the calculation, average recoveries are presented below for reference. Equation used: CuEq (%) = Cu (%) + ((Au (g/t) / (oz/g) * Au ($/oz) * Au Recovery (%)) + (Ag (g/t) / (oz/g) * Ag ($/oz) * Ag Recovery (%)) / (Cu ($/lb) * Cu Recovery (%) * (lbs/kg*10)), oz/g = 31.103, lbs/kg = 2.20, Au ($/oz) = US$1,650, Ag ($/oz) = US$21.50, Cu ($/lb) = US$3.50, Open Pit: Cu Recovery = 84.3%, Au Recovery = 60.0%, Ag Recovery = 57.8%, , Underground: Cu Recovery = 89.7%, Au Recovery = 71.4%, Ag Recovery = 70.3% facilities, regrind facilities, and thickening and filtration to produce copper concentrates for export (Figure 6). Gold and silver will report to the copper concentrate. Processing costs are summarized in Table 8 below.
Table 8: Mineral Processing
| Area | Units | Unit Cost | |||
|---|---|---|---|---|---|
| Reagents & Consumables | C$/t processed | 4.19 | |||
| Maintenance | C$/t processed | 0.32 | |||
| Power | C$/t processed | 1.87 | |||
| Labor | C$/t processed | 1.75 | |||
| Total processing Cost | C$/t processed | 8.13 |
Tailing Storage Facility
The TSF has been designed to accommodate over 96.3 Mt of tailings produced over the life of mine. The proposed TSF will be located in a valley east of the Stardust Deposit and upstream of the process plant site. The site drains to the northwest and southeast requiring two embankments to contain slurry tailings. Runoff above the facility will diverted around the facility in channels and perimeter access roads, which allows for simple access by the tailings deposition lines and water reclaim system. The TSF will be constructed using a shell of non-acid generating waste rock with an upstream impermeable layer. The construction of the TSF will utilize downstream construction methodology along with being built in multiple phases to ensure safety and long-term containment of the tailings. The facility is designed in accordance with Canadian Dam Association guidelines (2019) and Part 10 of the Health, Safety and Reclamation Code for Mines in British Columbia (2016).
Metallurgy
Metallurgical test work was undertaken in 2022 by BaseMet to test the viability of blending material from Kwanika and Stardust. Historical metallurgical testing data performed by SGS Minerals, ALS Metallurgy, and Bureau Veritas Commodities, was also included. Ausenco reviewed and interpreted the test work and incorporated the results into the process plant design criteria, flowsheet development, and process equipment selection. The design basis for the processing plant is 22,000 tpd at 92% availability. Design mineral grades to the process plant are estimated at 0.80% copper and 0.80 g/t gold to account for feed grade variability, and the estimated recoveries for open pit are 84.3% for copper, 60.0% for gold, and 57.8% for silver, and for underground are 89.7% for copper, 71.4% for gold, and 70.3% for silver.
Operating Cost Summary
The operating cost estimate for the 22,000 tpd operation was estimated at $23.04/t. A breakdown of total site operating costs is summarized in Table 9:
Table 9: Total Site Operating Costs
| Area | Units | Cost | |||
|---|---|---|---|---|---|
| Mining Cost | C$/t processed | 12.63 | |||
| Processing | C$/t processed | 8.13 | |||
| G&A | C$/t processed | 2.28 | |||
| Total Site Operating Cost | C$/t processed | 23.04 |
Capital Cost and Infrastructure Summary
The capital cost estimate was developed by Ausenco using an EPCM project development approach. Ausenco estimated the initial and sustaining capital cost based on the mining costs provided by Mining Plus, major process equipment quotes from vendors, and other costs from an Ausenco database of historical projects. The mine plan and associated mine initial, growth and sustaining capital were prepared by Mining Plus using current equipment prices and leasing terms and conditions provided by a mine equipment procurement consultant retained by NorthWest. Growth Capital is capital associated with brining new areas of mineralized material into production – namely the Kwanika underground block cave and Stardust underground. The process facilities and other related facilities were designed and estimated by Ausenco. The capital cost of these facilities was developed using budgetary quotes obtained for major process and infrastructure facility equipment requirements, and construction labour rates obtained from Ausenco’s database of projects in British Columbia. The 2023 PEA capital cost estimate is summarized in Table 10 below.
Table 10: Capital Cost Summary (in millions)
| Area | Initial Capital | Sustaining | Growth | |||
|---|---|---|---|---|---|---|
| Capital | Capital | |||||
| C$ | C$ | C$ | ||||
| Mining | 65.76 | 151.40 | 393.31 | |||
| Process Plant | 198.02 | 0.00 | 0.00 | |||
| Additional Process Facilities | 6.41 | 5.60 | 0.00 | |||
| On-Site Infrastructure | 21.61 | 4.90 | 0.00 | |||
| Off-Site Infrastructure | 82.53 | 78.50 | 0.00 | |||
| Project Preliminaries | 28.42 | 2.10 | 0.00 | |||
| Project Delivery | 50.36 | 2.10 | 0.00 | |||
| Owner's Costs | 33.68 | 27.34 | 99.96 | |||
| Provisions | 81.09 | 10.50 | 0.00 | |||
| Total | 567.90 | 282.43 | 493.27 |
Economic Analysis
Economic evaluations were generated incorporating forecasts for economic inputs using the Base Case and Spot Price. The Spot Price case is based on prices as of January 3, 2023. See Table 11 for the results of the economic analysis.
The 2023 PEA is preliminary in nature. It includes inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the 2023 PEA will be realized.
Table 11: Project Economics
| Parameter | Unit | Base Case | Spot Price | 52 Week | |
| High | |||||
| Copper Price | US$/lb | $3.63 | $3.83 | $4.94 | |
| Gold Price | US$/oz | $1,650.00 | $1,840.00 | $1,790.00 | |
| Silver Price | US$/oz | $21.50 | $23.97 | $23.30 | |
| CAD:USD Exchange Rate | US$/CAD$ | 0.77 | |||
| Average Annual Revenue | C$ million | $425.7 | $458.3 | $537.4 | |
| Economic Result (pre-tax) | |||||
| Avg. Free Cash Flow (“FCF”) | C$ million | $148.1 | $180.6 | $259.8 | |
| NPV (5%) | C$ million | $599.7 | $860.8 | $1,490.4 | |
| NPV (7%) | C$ million | $440.1 | $665.6 | $1,207.9 | |
| NPV (10%) | C$ million | $257.2 | $439.9 | $878.6 | |
| IRR | % | 17.1% | 21.7% | 31.9% | |
| Payback | Years | 5.99 | 5.55 | 4.67 | |
| Economic Result (after-tax) | |||||
| Avg. FCF | C$ million | $111.3 | $132.0 | $182.2 | |
| NPV (5%) | C$ million | $329.1 | $499.1 | $904.8 | |
| NPV (7%) | C$ million | $215.0 | $363.3 | $715.0 | |
| NPV (10%) | C$ million | $84.9 | $207.1 | $494.6 | |
| IRR | % | 12.7% | 16.4% | 24.7% | |
| Payback | Years | 6.37 | 5.86 | 5.11 |
Database
The database used for the Kwanika Central Mineral Resource estimate comprises collar, survey, assay, lithology, alteration, density, and structural information for exploration drilling conducted between 2006 and 2021. Drilling on the Central Zone totaled 76,156m in 166 holes.