The 100% owned Wellgreen project hosts a large PGM-Ni-Cu deposit located just off the Alaska Highway in the southwest of Canada’s mining-friendly Yukon Territory. A 2012 Preliminary Economic Assessment (“PEA”) on Wellgreen estimated open pit production potential of 7 million ounces of PGM + gold, 2 billion pounds of nickel and 2 billion pounds of copper over a 37 year mine life (please refer to footnote disclosure on the PEA below)1. The Wellgreen property features excellent access and transportation infrastructure and the deposit is just 15 kilometres by all-weather road from the paved Alaska Highway, a major all-season trucking route leading to deep sea ports at Haines and Skagway, Alaska. Ranked in the top 20 mining jurisdictions globally in the 2013/2014 Fraser Institute Survey of Mining Companies, the Yukon has a rich mining heritage that dates back to the Klondike gold rush of the late 1800s.
Wellgreen Platinum is focused on the advancement of the Wellgreen project toward production, with current efforts underway designed to further define the mineral resource, evaluate overall project economics, simplify project financing requirements and complete environmental permit applications.
The Company expects to release the results from an updated PEA by the end of Q2 2014.
- Estimated production of 7M oz PGM+ gold, 2B lbs. nickel and 2B lbs. copper1
- Executive management team with track record of success in large scale project development, operations and financing; specific PGM, Yukon and Sudbury District experience
- Severe, ongoing PGM supply risk as approximately 80% of production is from politically unstable jurisdictions
- PGM demand has grown at 4-5% per year for the last 30 years and is expected to continue due to global growth and rising catalytic converter use in China
- Yukon, Canada is a stable, mining-friendly jurisdiction ranked in the top 20 globally by the Fraser Institute
- 15km all season road to paved Alaska Highway leading to Haines & Skagway sea ports
- 2014 PEA will consider use of liquefied natural gas (LNG), a lower CAPEX start-up operation with phased construction, updated metallurgical recovery rates
- Exploration upside – expansion potential along strike and at depth within the 64 square kilometre Wellgreen property
1These estimated metal production numbers are from the 2012 Wellgreen PEA, the full text of which is available here and under the Company’s SEDAR profile at www.sedar.com. A PEA is preliminary in nature, in that it includes 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, and there is no certainty that the results of a PEA will be realized. A Mineral Reserve has not been estimated for the project as part of the 2012 Wellgreen PEA. Mineral resources that are not mineral reserves do not have demonstrated economic viability. A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a prefeasibility study. The mineralization at Wellgreen includes the platinum group metals (PGMs) platinum, palladium, rhodium and other rare PGM metals along with gold, nickel, copper and cobalt. At recent metal prices using anticipated metallurgical recoveries and proportionally allocated costs for each of the metals, the net economic contribution is anticipated to be largest for platinum, palladium and gold (3E elements), followed by nickel and then by copper and cobalt. These values may be different than gross in-situ metal values which do not factor in the costs for mining, processing, recovery, transportation, smelting or refining costs.
2014 PEA Update
The Company anticipates releasing the results of an updated PEA on the Wellgreen project in Q2 2014 and associated engineering studies on pit designs, the location and general arrangements of the mill, tailings pond, waste piles, water treatment system, accommodations, and water (domestic, potable and process) are in progress. The updated PEA will consider Liquefied Natural Gas (LNG) as a primary power source rather than higher cost diesel, which was the primary power source in the 2012 PEA. The project team is investigating a staged capex approach with a lower production rate than the 2012 PEA during the initial years of operation with the goal of decreasing pre-production capital expenditures. The Company will also evaluate the economics of larger production scenarios in the PEA update.
The Company has continued environmental baseline studies and First Nations consultation in order to begin the environmental assessment process in 2015.
2013 Project Activities
Mineralization at Wellgreen has been defined over a strike length of approximately 2.5 km and is open in most directions. Drilling conducted since 2012 has identified a nearly continuous zone of disseminated PGM, nickel and copper mineralization in ultramafic intrusive rocks, starting from surface and continuing down to 200-500 metres, with a higher grade package of ultramafics lower in the section of up to 150-300 metres with substantially higher PGM grades.
An updated geologic model for the project that integrates all existing geologic information is being developed as part of work to provide an updated resource estimate for the PEA update and which allows for the development of priority targets for future testing.
The 2013 Project Activities are summarized as follows:
- Re-Assaying Program – Historic 1987-88 drill hole core has been re-logged and was analyzed for 4E (platinum, palladium, rhodium plus gold), nickel & copper mineralization. In addition, 2006-2012 drill hole core was re-logged with the previous assay results being utilized since they are NI 43 101 compliant;
- Mineral Resource Update - Infill drilling was conducted at the site from July to October, 2013, to upgrade a significant portion of the existing Inferred mineral resource into Measured & Indicated resource categories and to test key areas with potential for expansion;
- Mineral Resource Expansion – In addition to the main Wellgreen resource which remains open to expansion in multiple directions, the Quill and Burwash areas to the east of the main resource demonstrate geomagnetic & geochemical structures that are similar to those at Wellgreen. Priority targets in those areas may be investigated in the future;
- Mine Planning - JDS Energy & Mining Inc. has commenced a mine planning review as part of the PEA Update to evaluate a staged development approach focused on accessing higher grade material that is near-surface or accessible underground is scheduled earlier in a mine plan involving a lower processing throughput than the 2012 PEA. The objective of this approach is to evaluate a project with lower pre-production capital requirements than the 2012 PEA, with capacity expansions over time;
- Metallurgy - Eggert Engineering Inc. has continued the metallurgical testing program for the PEA update, with the objective of increasing PGM and Ni recoveries as well as improve concentrate quality. A magnetic separation circuit that has been inserted into the mill flow sheet after the Cu flotation circuit and before the Ni flotation circuit is being tested;
- Environment & Permitting - Baseline environmental studies continue on the Wellgreen project including drilling of water wells for ground water monitoring which was initiated in Q4 2013. This program is intended to provide the information necessary to enter the environmental assessment process in 2015.
The Company has conducted a thorough technical review of the Wellgreen project, including a comprehensive assessment of exploration results back to the 1950’s. With the historic focus on high grade massive sulphide occurrences amenable to narrow seem underground mining many of the historic drill holes were only selectively assayed for high grade mineralization. With a focus on the bulk mining potential of the deposit the Company has re-logged and completed continuous assays where possible sampling all of the material within the mineralized ultramafic host rocks.
On July 17, 2013, the Company announced the commencement of the 2013 exploration field program. Metallurgical test work and engineering initiatives had also commenced at that time. Comprehensive re-logging and cataloging as well as re-sampling of historic drill holes has now been completed and is being integrated and interpreted. The total re-logging and re-testing program completed to date is 18, 377m.
RE-ASSAYING PLAN VIEW
A targeted surface exploration drilling program, designed to upgrade a portion of the Inferred resource as well as test potential higher grade zones also commenced in July 2013. This drill program was completed near the end of November 2013. The program included deeper holes from surface designed to pursue higher grade PGM mineral resources as well as a number of shorter holes designed to increase confidence in the model and upgrade portions of the resource to Measured & Indicated resources from Inferred.
All of the historical exploration data that was re-evaluated along with most recent drilling programs will be utilized in an updated deposit model that is projected to be completed by Q2 2014 and will be part of a PEA update. The above image shows the locations of the historic holes that were re-logged and assayed in 2013 and early 2014.
As noted above, extensive work conducted on the geologic modeling of Wellgreen revealed some exciting new potential developments. The modeling work started in the center of the deposit with the most concentrated drill information and moved out from there to both the easternmost and westernmost ends where less information was available. This work has been aimed at increasing confidence in the resource model, defining new bulk mineable zones of mineralization that have not been previously recognized as well as better defining the geometry and distribution of higher grade material in the resource.
2.5Km Strike: Open East / West and at Depth
- The Central Zone remains open down dip and along trend within both the western and eastern ends of the deposit;
- The previously highlighted higher grade target on the west end of the main Wellgreen deposit, referred to as the Far West and West Zones, begins at surface and is open to expansion to the south. This material is as much as three times higher grade than the average of the deposit; and
- The modeling and compilation effort has also identified a higher grade zone at the east end of the deposit which occurs to the north of the main tabular body that hosts the current mineral resource. The East and Far East Zones show areas of significantly higher grade than the average of the deposit and are often enriched in PGMs and copper. Based on recent and historical drill results, this zone is in excess of 300 meters in width and is open to expansion in all directions. The new assessment and interpretation is that this zone may represent a potential connection between the main Wellgreen deposit and a second parallel tabular body referred to as the North Arm that is not currently included in the mineral resource but was 2012 PEA pit outline.
Resource Expansion Potential
As the vast majority of the Wellgreen property’s 64 square kilometres has received little exploration work, the Company recognizes that there may be opportunities to increase the overall mineral resource through additional exploration work. The Company has developed priority targets for new drilling near high grader resource blocks, which have not been classified as mineral resource. These targets are beyond the lateral or vertical extent of the existing drilling limits.
To the east of the known mineral resource are the Quill and Burwash areas, both of which demonstrate geomagnetic and surface geochemical signatures which are similar to those found at Wellgreen proper. The results indicate the possibility that these sites may be part of the same mineralized system found at Wellgreen. Higher grades also appear to develop at the western part of the property and further exploration drilling may also occur in this area.
Market conditions in the resource sector have led major institutional investors to focus on projects with lower pre-production capital requirements over those with large scale high initial capex expenditures. To address this, the Company is analyzing first-stage operations targeting a lower production rate and a significantly reduced capex scenario as compared to the 2012 PEA1. The full text of the 2012 Wellgreen PEA is available here and under the Company’s SEDAR profile at www.sedar.com.
During its production phase in the early 1970s, Sumitomo Group contracted with Hudbay for the purchase of Wellgreen concentrate, which included nickel, copper, platinum, palladium and gold as well as the exotic PGMs (including rhodium, osmium and iridium and ruthenium).
The metallurgical test work upon which the 2012 PEA was based was preliminary in nature and attained the initial objective of demonstrating the material would report to a conventional sulfide flotation circuit bulk concentrate. Subsequent metallurgical testing has supports the potential of using conventional sulphide flotation methods to produce separate nickel and copper concentrates (click here to view the 2012 metallurgy report). The metallurgical testing also indicated opportunities to optimize recoveries, improve concentrate quality, and pursue recovery of rhodium, ruthenium, osmium and iridium.
Metallurgical test work continues in 2014 to look at improving metal recoveries of disseminated mineralization (particularly in the PGMs), improve concentrate quality and estimate the economic contribution of the rare PGMs that are present in specific high grade high sulphur domains. Work is looking at the flotation recovery of the metals using variations of grind size, flotation methods, reagent usage and magnetic separation. As part of this process, a magnetic separation circuit was added to look at improvement of recovery from the magnetic minerals which may benefit by re-grinding. The magnetic separation “tail” then enters a separate main nickel flotation circuit. The nickel flotation product and the magnetic separation nickel flotation product are then combined into one nickel concentrate.
The magnetic separation step may allow for the use of more aggressive nickel sulphide flotation reagents. Results from the metallurgical testing program will be included in the PEA update, which the Company targets to release by the end of Q2 2014.
Environment & Permitting
Baseline environmental studies continue on the Wellgreen Project, including collection of meteorological data, surface water quality and flow data, ground water quality and flow data as well as wildlife and vegetation studies. These baseline studies are being conducted in collaboration with the Kluane First Nation as part of the exploration cooperation and benefits agreement announced by the Company on August 2, 2012. The Company targets initiating the environmental assessment process in 2015. The Yukon and Federal Government guidelines suggest 18-24 months as a guideline to review mine permit applications. The review consists of discussing the baseline data, assessing the project/operation influence on the environmental baseline and evaluating the mitigation processes proposed by the Company to minimize the influence of the project and operations as part of the overall mining permit application. The environmental assessment process at Wellgreen should be facilitated due to the project being a former operating mine in an area with historic and current placer mining and with the support of the Kluane First Nation. Wellgreen Platinum will continue to pursue First Nations engagement and seek ways to facilitate local economic and business development opportunities through the various stages of project implementation and operations.