Desktop Economic Assessment for Storm Copper Project (Cyclone & Chinook Pits)
1. Project Overview:
My assessment examines the economic viability of the Storm Copper Project, located in Nunavut’s Arctic region, focusing on the Cyclone and Chinook deposits. By employing advanced ore-sorting and jigging technologies, the project aims to deliver Direct Shipping Ore (DSO) with a high-grade copper concentrate, maximizing efficiency while minimizing costs and environmental impact.
2. Mining Strategy:
The Storm Copper Project, part of the Cornwallis Fold and Thrust Belt, hosts a high-grade sediment-hosted stratiform copper deposit, with chalcocite as the primary copper mineral. Copper mineralization is found in veins and breccias within dolomite host rocks, with thick, coarse veins correlating to higher grades. The contrasting physical properties of chalcocite and dolomite support efficient ore sorting and jigging as viable, low-footprint processing methods. These formations are believed to result from tectonic activity during the Ellesmerian Orogeny, which facilitated ore-bearing fluid migration, creating extensive copper mineralization across various structural settings.
Given the shallow depth of mineralization at each deposit, an open pit mining method is selected for this study. The planned pit design assumes selective mining. Open pit slopes are assumed to be 44 degrees, with copper recovery estimated at 90% from ROM material.
3. Mineral Processing:
The main bulk ore upgrading system applied to the open pit material will be via a sensor-based sorting technologies (X-Ray Transmission) to improve the efficiency of copper recovery. This technology is aimed at rejecting coarse waste material (predominately dolomite) from the mined ore to allow a final DSO product to be generated.
- Process Plant Feed Rate: 1.5 million tonnes per annum
- ROM Feed Grade: 1.5% Cu
- DSO Product Grade: 18% Cu
- Operating Days per Year: 304 days
- Plant Utlisation: 75%
- Upgrade Route: Crushing and Screening Circuit followed by 4x XRT Ore Sorting units treating 10-35mm particles in parallel to 2x Inline Pressure Jigs treating <10 mm particles.
4. Processing Plant and Capital Costs:
The conceptual plant will be designed for ore sorting and beneficiation, with capital estimates ranging from USD$18-23 million. This estimate includes:
- Ore sorting and wet jigging equipment
- Conveyor system from unit processes
- ROM Jaw Crusher, Screen, pumps, compressor station, samplers, etc.
- The consultants engaged for the Storm Copper Project’s processing plant design include ALS Metallurgy, Ausenco, Sacre-Davey, and Nexus Bonum. The consultants’ combined work produced highly favorable results, confirming the copper mineralization’s amenability to upgrading and leading to a robust design for the processing plant that maximizes both yield and efficiency.
- Based on ASX release, Direct Shipping Ore (DSO) development potential confirmed at the Storm Copper Project, Canada, 12th August 2024.
Excluded costs associated with permitting, insurance, mining & haulage, and site infrastructure like camp, offices, fuel storage, accommodation, and telecom facilities.
5. Operating Costs (OPEX):
- Mining Costs: USD$5/tonne
- Processing Costs: USD$10/tonne (includes ore sorting and Inline Pressure Jig (IPJ))
- G&A: USD$12/tonne
- Total OPEX: USD$27/tonne treated.
6. Recovery and Copper Production:
The ore sorting combined with jigging circuit technique is expected to recover 61% of the copper from the feed at Cyclone pit, producing 76,000 tonnes of DSO material per annum, containing 18% copper. This yields approximately 13,700 tonnes of copper metal annually. Cyclone pit ore is considered the baseline case.
Treatment of the higher quality Chinook deposit offers further upside of producing 86,300 tonnes of DSO material per annum (+10,300 tonnes of DSO over Cyclone ore zone) or a total of 15,500 tpa copper metal (+1,800 tpa Copper metal units over Cyclone) given Chinook deposit offers a higher mass yield and DSO copper recovery at 69%.
Later this year, an updated mineral resource for Cirrus, Lightning Ridge and Thunder is expected to provide additional ore sources within the Storm prospect zone. This will expand treatment options and enhance the flexibility for selecting high grade ore sources over the Cyclone pit base case proposal.
7. Revenue and Profitability:
- Copper Price: USD$3.85 per pound (USD$8,487.90/tonne)
- Annual Copper Production: 13,700 tonnes (Cyclone) or 15,500 tonnes (Chinook)
- Annual Revenue: 13,700 tonnes x USD$8,487.90/tonne = USD$116.3 million (Cyclone) versus USD$131.6 million (Chinook)
- Profit per Tonne: USD$50.52 per tonne treated at Cyclone pit versus USD$60.70 per tonne treated at Chinook pit
- Other metal credits: Silver credits are excluded from this calculation.
Note: The Cyclone stockpile of the beneficiated Rejects material is stated at 1,424,000 tonnes per annum, grading 0.62% Cu, containing 8,800 tpa copper. This alone will increase over time and provide a rich feed source for any flotation plant which may be developed. Assuming an 80% flotation recovery, the treatment of the Reject Stockpile will provide a further 7,040 tonnes per annum of copper metal, valued at USD$59.8 million once treated in a flotation circuit. In the case of the 1,413,700 tonnage Chinook Rejects Stockpile generated each year, grading only 0.49% Copper and containing 6,900 tpa copper metal, a flotation circuit would ultimately recover 5,520tonnes of copper metal valued at USD$46.9 million.
8. Environmental and Social Considerations:
Environmental impacts include potential effects on local wildlife, water quality, and regional ecosystems. A comprehensive Environmental Impact Assessment (EIA) will be necessary for permitting. Social considerations include potential benefits to local communities through job creation and infrastructure development, with a focus on maintaining environmental stewardship.
9. Project Economics:
Based on the current ore sorting concept, the Storm Copper Project offers a high-margin operation with a focus on DSO production. This analysis indicates that the project can be economically viable with a strong revenue stream driven by high copper prices and efficient ore processing over a 12-year mine life based on the maiden mineral resource of 17.5 million tonnes. Priority treatment of Chinook pit enhancing revenue by 13% due to its higher copper recovery profile.
On 17th October, Dave O’Neill indicated, “Further assays have also been received from drilling at Cyclone which continue to highlight the potential to both upgrade and expand the deposit with further thick zones of copper mineralisation intersected within, and outside the current resource envelope.The latest drilling results continue to clearly demonstrate the strong open-pit mining potential of the Storm copper deposits, with 100% of the resources either outcropping or located near-surface”.
Hence, after the successful 2024 exploration season, it is anticipated IMHO, the maiden Mineral Resource estimate will grow from 17.5 Mt @ 1.2%Cu to greater than 35 Million tonnes of mineral resources at Storm. If this turned out to be the case, a significant growth in the copper inventories critical mass will allow major rethinking of the project economics to be achieved. This either stretch’s the mine-life out to 23-years based on the proposed 1.5 Mtpa plant design or it justifies the expansion of the processing facility from 1.5 Mtpa to +3.0 Mtpa, further improving the project economics by allowing significant economies of scale to be achieved.
10. Project Upside:
- Mining and treatment of alternative high-grade near-surface mineralisation options – Lightning Ridge, Cirrus, Thunder, Corona, The Gap, Squall, Tornado, Blizzard and Tempest, etc. This could be revealed in the updated MRE later this year or early 2025.
- Treatment of Reject Stockpiles via a future flotation circuit (Longer term option) – the rejects material will be of a known grade and particle sizing making it a perfect feed source for a ball milling & flotation circuit.
- Expansion of baseline treatment rates from 1.5 mtpa to >3.0 mtpa (Short to Medium term) – a staged expansion of the process plant (debottlenecking / proving technology) will easily increase revenue for the project.Eg. 3 Mtpa = USD$233 millon annual revenue for very little upgrading of phase 1 infrastructure.
- Treatment of Storm “Deeps” sedimentary copper ore zones based on the stacked mineralized horizons (Long term upon further exploration activities)
11. Next Steps:
- Release updated Mineral Resource Estimate (MRE) based on 2024 drilling program to grow the copper inventory
- Finalize permitting and environmental assessments
- Conduct detailed metallurgical testing for any new ore domains or prospects to allow ore sorting optimization
- Progress Mining, ESG and economic (PFS) studies
- Undertake further exploration drilling campaigns to expand the resource in priority geophysics target zones
- Secure project financing and finalize capital investment plans (Bankability Feasibility Study)
The Storm Copper Project’s initial assessment shows strong economic potential, thanks to a high-grade DSO approach and efficient ore-sorting techniques. Further exploration could significantly expand resources, extending project life and increasing potential yields. With upcoming resource estimates and improved infrastructure, Storm Copper stands well-positioned for profitable, sustainable operations as demand for copper intensifies.
Reference:
ASX Release, Direct Shipping Ore (DSO) development potential confirmed at the Storm Copper Project, Canada, AW1, 12th August 2024
