NorthIsle Copper and Gold CEO: Developing Pemberton Target Via a Joint Venture with Freeport-McMoRan

Base Metals Investing

NorthIsle Copper and Gold CEO Jack McClintock highlights the value of the company’s joint venture opportunity with Freeport-McMoRan.

NorthIsle Copper and Gold CEO Jack McClintock (TSXV:NCX) believes that a newly announced earn-in agreement with Freeport-McMoRan (NYSE:FCX) for the development of the Pemberton Hills target is a vote of confidence for NorthIsle’s project on Vancouver Island.

As one of the largest copper miners in the world, Freeport will bring extensive experience and knowledge to the project’s development.

In the interview below, McClintock discusses the reasoning behind entering into a joint venture at this time and provides further insight into the work being conducted on the project.

Below is a transcript of our interview with NorthIsle Copper and Gold CEO Jack McClintock. It has been edited for clarity and brevity.

Investing News Network: Please tell our investors about the recently announced earn-in deal with Freeport-McMoRan for NorthIsle’s Pemberton Hills target.

NorthIsle Copper and Gold CEO Jack McClintock: Freeport-McMoRan is earning in on Pemberton Hills, one of the exploration targets on our 33,000-hectare property. The target is a large 3.5-kilometer by 1.5-kilometer area with a high-level porphyry copper alteration with encouraging drill hole results, suggesting a porphyry deposit at depth.

Under the terms of the deal, Freeport can earn 49 percent of the target by spending $4 million over three years. They will then have a one-time option to increase their interest to 65 percent by spending an additional $20 million over four years. NorthIsle will be the joint venture’s initial operator up until Freeport makes the decision to expand to 65 percent. If they decide against that, then we will remain as the project’s operator.

INN: What does it mean to have one of the largest copper miners in the world option a NorthIsle exploration target?

JM: Having Freeport become involved in the project brings us two votes of confidence. The first is that to come in, Freeport had to be convinced that there is potential to find a world-class copper-gold porphyry deposit on the property. Secondly, Freeport would not be investing in the project if they did not think that they could develop a mine at the northern end of Vancouver Island, where our project is situated.

INN: Why didn’t NorthIsle test the Pemberton Hills target itself?

JM: We have always ranked the Pemberton Hills target highly. However, it is quite remote and separate from our two known deposits: Hushamu and Red Dog. Going forward, we want to focus our efforts on testing the targets near these two deposits so as to expand their resources, which would have a positive impact on our project economics and could further improve the NPV (8 percent) of $550 million and IRR of 14.3 percent.

INN: Is NorthIsle looking to farm out other parts of its North Island project?

JM: We view this deal on Pemberton Hills as a one off. The target is quite remote and is independent from the rest of the work being done. As to the rest of our project, we want to keep focused on our defined deposits, improving our metallurgy and conducting further engineering studies to optimize production rates. We are also exploring the option of using the nearby Island copper pit as a place to deposit our tailings.

INN: When do you expect drilling at Pemberton Hills to begin?

JM: We still have some work to do before we start drilling, including finalizing our drill permits. We hope to get our drilling started by the end of August or by early September of this year.

Watch NorthIsle Copper and Gold CEO Jack McClintock’s interview from PDAC 2018:

The interview below was originally posted in September 2017. Please scroll up for our most recent interview with NorthIsle Copper and Gold CEO Jack McClintock

In September, NorthIsle Copper and Gold (TSXV:NCX) released the preliminary economic assessment( PEA) for its flagship North Island project. It includes an after-tax NPV (8 percent) of over $500 million and an after-tax IRR of 14 percent.

NorthIsle Copper and Gold is developing its North Island copper-gold project in Northern Vancouver Island, an area with a long history of resource development and mining. The brownfields project includes two defined deposits, Hushamu and Red Dog, and the resource estimates for both these properties form the basis of the company’s recent PEA.

According to NorthIsle Copper and Gold President and CEO Jack McClintock, the results of the PEA show that the 100-percent-owned North Island project compares favorably with its larger competitors. He still sees further opportunities for improving the NPV and IRR values.

Watch the video below for more insight from McClintock on the PEA results, and on what sets NorthIsle Copper and Gold’s project apart from its peers. You can also view the transcript of our interview with McClintock below; it has been edited for clarity and brevity.

Investing News Network: Please tell us what is special about your PEA and your project.

NorthIsle Copper and Gold CEO Jack McClintock: Our PEA was recently released, and it came out very favorably using our base case at $3.10 copper, $1,300 gold and $9 molybdenum. The results include an after-tax NPV (8 percent) of over $500 million and an after-tax IRR of 14 percent. For a large copper and gold project, a 14 percent IRR is very positive. As a comparison, BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT) just announced that it is going ahead with a major expansion of one of its mines in Chile, and its expected IRR is 16 percent. As you can see, we compare favorably with what the major companies look for in an IRR.

INN: How have you made this project so attractive?

JM: When we originally acquired the project in 2011, it held a historical resource of approximately 250 million tonnes. By drilling the project, we have now more than doubled that and have well over 500 million tonnes. In analyzing the project, we also recognized that it could be vastly improved if we acquired a higher-grade starter pit. This led us to look at a project nearby called Red Dog, which was much smaller than ours, but reported a much higher grade. Both the copper and gold grades were 50 percent better, and the mine also boasted a near zero-strip ratio. By acquiring Red Dog in 2015 and adding it to our resource base, we significantly improved the prospects of the project.

INN: What is the next re-evaluation for NorthIsle Copper and Gold?

JM: We have highlighted some quick wins for this project. The first is that we feel we can improve the gold recovery through some additional metallurgical work. We also think there is some opportunity for optimizing the production rate. We believe we can shift the daily production rate up to 80,000 or 85,000 tonnes per day with minimal additional capital expenditure. This would help us bring cash flows forward and would improve the IRR and NPV values.

This project is a brownfields development and sits beside the old BHP Billiton Island copper mine. One of the options we have, therefore, is to look at putting our tailings into the old BHP pit. This would help us in two ways. On the one hand, it would reduce our operating costs. On the other, it would be a much better environmental solution than having a large tailings facility on site. Another aspect that will impact the project is that our Hushamu deposit is still open to the southeast. Additional drilling in that area has the potential to add significantly to our resource base and ultimately could impact the size of our operation and the value of the company.

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