Copper North CEO Harlan Meade on the Future of the Carmacks Project

Update: On October 22, Copper North released a clarification with respect to technical disclosures in its news releases dated September 8, 2015 and September 23, 2015, in its corporate presentation dated October 3, 2015 and in the following interview. This article has been updated as a result. Please see the full news release here.
On September 23, Copper North Mining (TSXV:COL) put out drill results from its Carmacks copper-gold–silver project in Canada’s Yukon.
Highlights from Zone 13 at the project include intercepts of 31.3 meters of 0.8 percent copper, 0.18 g/t gold and 2.57 g/t silver, as well as 102.1 meters of 0.37 percent copper, 0.09 g/t gold and 1.21 g/t silver.
The results confirm a thick, near-surface zone of oxide copper, as well as a transition zone to sulfide copper mineralization that remains open along strike and to depth.
The Investing News Network spoke with Dr. Harlan Meade, president and CEO of Copper North, to get a bit more insight into the Carmacks project. Meade has more than 30 years of experience in exploration and development in the mining industry, and holds a doctorate in geology as well as a master’s degree in business administration.

Drill results and tonnage potential

Explaining why last month’s results were significant for the company, Meade stated that the mineralization confirmed in Zone 13 is much more shallow than in other areas of the deposit.
“Historically, we weren’t that interested in sulfide, because the sulfide resource that had been defined was at the bottom of the current ore reserve,” he said. “So we never put much emphasis on that.”
Meade explained further that those sulfide ores are “seven years out and at the bottom of the pit,” which would likely mean a high strip ratio. “The difference is that where we’re drilling now is quite shallow,” he continued. “I don’t think we’ve drilled any holes this year any deeper than 120 meters, [with] oxide and sulfide right at surface. And that makes the sulfide a lot more interesting in the future extension of the mine.”
Copper North also included tonnage potential in its most recent drill results, placing the estimated tonnage potential for Zone 13 at 7 to 9 million tonnes. That estimate does not include grades, and the company has stressed that it does not constitute resources or reserves compliant with NI 43-101 standards.
To be sure, that’s a bit unusual. Meade admitted that including tonnage potential is “on the edge,” but that Copper North feels it is important to inform investors of what’s going on. “It’s a little bit unusual, but I think it’s fair,” he said. “If you’re going to give full disclosure, then this is significant to the company. It should [be] public.”
He added that the company double checked that it would be staying “within the lines of public disclosure” before releasing the information on tonnage potential. “Now we’ll go and do a 43-101 resource,” he said. 

Survival in a tough market

Meade stated that Copper North isn’t yet funded for all of the work it’s hoping to complete at Carmacks. He noted that the company had arrears of a million and a half dollars when he came in in April 2014.
“We cleaned that up and funded the work that we’ve done, expansion of resources, re-engineering and a lot more metallurgical work,” he said. “On all of that we’ve now spent roughly $5 million, and we need another million or two to get to the finish line.”
Meade added, “in this market, the retail person makes your share price, not the big guys.” However, he admitted that dilution is a real concern given the current state of the market, and that the investments needed to take the next big steps for Carmacks “are not retail investors, and they’re probably not Canadian funds.”
The company has seen interest in the project from parties in China and other places in Asia, as well as in the Americas and the UK. However, Meade explained that many of those interested are hoping to see an updated preliminary economic assessment( PEA) and resource estimate with an extended mine life for Carmacks before they put any money on the table.

Targeting PEA improvements

As per a June 2014 PEA, Carmacks is slated for a seven-year mine life. There’s a US$13-million post-tax net present value (NPV) at a 10-percent discount, and a 12-percent post-tax internal rate of return (IRR) at a 4.9-year payback.
However, Meade stressed that he is confident that those numbers will improve in the updated report, and noted that the company has already released some guidance on how it expects to reduce capex for the mine. “None of the people we’re talking to are paying attention to economics on our website,” he said.
Meade explained that the company updated its leach plan for the mine in June to include an agitated leach tank. He added that he sees other ways to reduce expenditures as well. “We haven’t factored in the fact that there’s a significant reduction on capital equipment if we source it out of China,” he explained, stating that such an approach could cut equipment costs by an estimated 40 percent.

Oxide vs. sulfide

So far, Copper North has been interested mainly in the copper oxide mineralization at Carmacks. The company is planning to break down its oxide and sulfide resources for future consideration, but Meade stated that at this point, adding the sulfide resource to the economics of the mine won’t add much value in terms of the project’s NPV or IRR.
However, the company is looking into new technologies that will allow the processing plant at Carmacks to switch from oxide to sulfide processing using the same facilities. Such technologies are already being used for some projects. Meade also stated that a superior technology was identified four or five years ago, and that Copper North is hoping that tech will be proven by the time it goes into production at Carmacks.

Production costs are the name of the game

When asked how the Carmacks project compares to other copper development projects out there at the moment, Meade spoke about production costs.
“I think we’re in an ideal position,” he said, “but ultimately, the best way to rank yourself against another project is to look at your C1 cash cost.”
Looking at Copper North’s June 2014 PEA, Meade noted that the C1 cash cost for Carmacks sits at about US$1.07 per pound. “We think we can beat that number,” he said. “I think we have the basic elements of making a very good project and company because we do have the ability to get some very low costs. And we get those low costs because we get gold-silver credits.”
The market is a difficult place to be for mining companies right now, but Meade stressed that Copper North will look to finance Carmacks in a way that won’t compromise its cost of production. “What we need to do is to finance this in a way that does not result in too much metal streaming or these kinds of things,” he stated.
Copper North is hoping to resume drilling at the Carmacks project in mid-October. The company expects to complete an updated resource estimate by November and an updated PEA by the end of Q1 2016.
Copper North is currently trading at C$0.04. The company is down 42 percent year-to-date and has traded within a 52-week range of C$0.04 to C$0.09. It has a market cap of C$5.24 million.
 Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Copper North Mining is a client of the Investing News Network. This article is not paid-for content.