Sherwood Copper Corp. has assembled an experienced cast of characters to get its copper-gold Minto property up and running this spring.
Edmonton-based Clark Builders has signed on as the Minto project’s general contractor, fresh from building the Jericho diamond mine in the Northwest Territories.
Jeff Stibbard, head of JDS Energy & Mining Inc. in Kelowna, signed on as construction manager.
Stibbard was general manager at the Island Copper project on Vancouver Island and the Ekati diamond mine in NWT.
Local expert Bill Dunn, a senior minerals development adviser with the Yukon government, was hired as the project’s general manager.
And Whitehorse-based Pelly Construction Ltd. is already moving heavy equipment across the frozen Yukon River onto the site near Minto Landing, to begin stripping the deposit by early summer.
The team is essentially in place, said Sherwood CEO Stephen Quin.
Now, all that’s needed is a bankable feasibility study, expected in April.
“Everybody’s getting up to speed, really, in parallel with completion of the feasibility study, which shortens the lag time between the completion of the feasibility study and the start of construction,” Quin said Tuesday.
“The target, as opposed to a definitive plan, is to be in production earlier than originally planned.
“We’ve been drilling in the pit to confirm the grades, and so far they are better than expected.
“That could boost the tonnage and improve the grade of the overall resource.”
Sherwood wanted to be digging ore out of an open-pit copper mine at Minto by mid-2007.
But Pelly Construction proposed to start moving onto the site before spring breakup, to get a jump on the project.
And Sherwood bit.
With the early mobility, Minto could be in production between April and June next year, three or four months earlier than originally planned, said Quin.
In order to secure more than $30 million long-term financing, Sherwood needs the feasibility study that international engineering giant Hatch Ltd. has promised to deliver before May 2006.
“A bank is not going to give you bank debt until you have the feasibility study,” said Quin.
“But you always have to put a component of equity in. It’s like buying a house; you don’t get 100 per cent mortgages.”
That’s why Sherwood has offered some investors a deal to get things rolling earlier than planned.
Sherwood sold about $12.5 million worth of $1.40 warrants to investors that are due for payment in June 2007.
But the company anticipates being in production by then, and offered to buy the warrants back early, to get cash flowing right away.
“We went to our warrant holders and asked them to exercise their warrants early, so we would get the cash,” said Quin.
With Sherwood’s stock hovering at about $1.75, warrant holders stood to make 35 cents profit.
Sherwood gave them all an additional half-warrant for two years as an additional incentive.
The company recouped about $11.2 million, said Quin.
“That gave us the equity to start spending on capital. As soon as that was completed, we signed up with Pelly.
“Pelly is moving their equipment in now, getting ready to start the stripping and civil construction work that needs to be done.”
Sherwood is installing temporary “enviro-tanks” for fuel storage until a permanent storage structure can be built, he added.
“That way Pelly can work before the barge operation starts up and actually do the stripping work during breakup.
“They’ll kick off the serious construction work by summer.”
By then, a second ball mill that Sherwood recently purchased from the American Smelting and Refining Company should have arrived.
When Sherwood bought Minto from ASARCO, a sag mill and a ball mill were already built at the site.
The second ball mill will boost the amount of ore the plant is able to process to 2,400 tonnes per day, said Quin.
Right now the second mill is just sitting in Arizona, waiting to be shipped north, he said.
But once the mill gets here, it won’t be usable right away, without an amendment to Sherwood’s quartz mining licence, which limits the amount of ore Minto can process to 1,800 tonnes per day.
“We will not install that ball mill until we are approved to do so,” said Quin.
“We will be making application to amend the permit sometime in the next two or three months.”
The quartz and water licences were grandfathered to Sherwood, which is a big part of the reason why Minto is the Yukon’s best bet for a major mining operation in the near future.
It doesn’t have to negotiate the untested waters of the Yukon Environmental and Socioeconomic Assessment Act to launch the project into production.
But for modifications to its licences Sherwood will have to jump through the YESAA hoops.
The second ball mill is a small part of the company’s future plans. And it won’t enlarge Minto’s industrial footprint, but merely speed up production.
Sherwood is seeking an extension for both its licences until 2016, which would last most of the deposit’s estimated 11-year lifespan.
And the company also has promising data from the hills surrounding Minto.
Quin hopes to continue with some preliminary exploration in the area this summer.
“If we went outside the main deposit, we would have to go through YESAA,” he said.
“We took the opportunity of having the drill up there to test some of the exploration targets.
“This is entirely away from the targeted area.” Those results are expected later in March.
“If the results are good that will be great,” said Quin.
“If not, we’ll have to scratch our heads.”