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Mining News: Junior hunkers down at Turnagain Hard Creek Nickel aims to weather financial storm by focusing on metallurgical studies, development work at giant nickel project Shane Lasley Mining News
In a recent message to company stakeholders, Hard Creek Nickel Corp. President Mark Jarvis, described the credit crunch, worldwide recession and collapse in commodity prices as the “perfect storm.”
Though this tempest may be particularly hard on juniors exploring base metal properties, Jarvis said Hard Creek Nickel has the wherewithal and funds to prepare its giant Turnagain nickel project in northern British Columbia for smooth sailing when the markets turn around and the world once again demands nickel’s stainless qualities.
He said the Vancouver B.C.-based junior began adjusting its development spending at the first signs of the storm brewing in early 2008. As a result, Hard Creek Nickel had about C$5.3 million in the bank at the end of 2008, providing the company with enough capital to continue to advance the Turnagain nickel project without raising additional funds until the end of 2010, and with a few adjustments, the junior could make the money last well into 2011.
The Turnagain project, Hard Creek Nickel’s flagship property, is located about 70 kilometers east of Dease Lake. Turnagain has an estimated resource of about 580,000 metric tons of recoverable nickel, enough to produce 44 million pounds of nickel annually for 29 years.
Low cost nickel The most recent engineering report, prepared in December 2007, estimates a base-case price of US$7.50 per pound for nickel is needed for positive economics at the Turnagain project.
Nickel, which was selling for about US$24 per pound in mid-2007, is now selling for a meager US$4.50 per pound. The dramatic price drop is attributed largely to the economic slowdown and reduced demand for stainless steel, the primary use of the base metal.
Many analysts agree with Jarvis that production cuts driven by low nickel prices coupled with increased demand spurred by economic stimulus programs in China and the United States, the top two consumers of industrial metals respectively, are keys to the recovery of nickel and other base metal prices. The infrastructure portions of the stimulus plans are expected to have the most immediate effect on nickel demand.
Another upside for Turnagain, according to Jarvis, is the sulfide mineralization of the nickel deposit. Jarvis said most of the large new nickel projects awaiting development are lateritic deposits, which are more difficult and expensive to process (about US$5.50 per pound) than sulfide nickel deposits like Turnagain, which average processing costs of about US$4.00 per pound.
Nickel prices need to be nearly double processing costs for mining projects to be economically feasible, he explained.
Not only does Turnagain consist of low-cost sulfide mineralization, it also boasts a .44-to-1 strip ratio. “Pretty much strip the dirt off the rock and you’re in it (mineralization),” Jarvis said.
Though metal prices have fallen below the base-case price for positive economics for the project, Hard Creek Nickel plans to continue to take steps necessary to prepare the project for development when nickel prices turn again.
No drilling in ‘09 Jarvis told Mining News that Hard Nickel does not plan to do any drilling at Turnagain in 2009, explaining that drilling burns up capital quickly.
“Our treasury has about C$6 million in it, but you spend that money awfully quickly when you turn a drill. We have already got more than half a billion tons in the measured, plus indicated category and another half a billion tons in the inferred category,” Jarvis explained.
The company plans to use its available funds on metallurgical work, consultation with First Nations, continuing environmental baseline studies and other efforts important to mine planning and permitting.
Focused on metallurgy In January, Hard Creek Nickel contracted Perth, Australia-based Norilsk Process Technology Pty Ltd. to determine the viability of Activox technology as the hydrometallurgical process to extract nickel and cobalt concentrate from the Turnagain deposit.
According to SGS Mineral Services, which developed the patented process, Activox is a form of pressure oxidation which operates at milder conditions of temperature and pressure than conventional pressure oxidative leaching. The milder operating conditions simplify the engineering requirements and reduce costs, yet maintain the advantages of pressure oxidation.
“Turnagain is a nickel in sulfides deposit, which means that the contained nickel can be concentrated using traditional froth flotation technology. This simple fact is the basis of our belief that the Turnagain deposit will prove competitive with lateritic nickel deposits in the long term. A major part of our budget and focus over the next year will be on optimizing mineral dressing and evaluating various low and medium temperature acid leach technologies to further upgrade the concentrate before shipping. The idea is to move farther down the cost curve and to increase our competitive advantage over the large lateritic nickel deposits,” Jarvis wrote in his president’s message.
First Nations negotiations Jarvis said negotiations with First Nations in the region will be another key aspect of the company’s efforts in 2009. Hard Creek Nickel plans to build on an agreement signed with the Kaska Dena in October 2008.
The parties hailed the “cornerstone agreement” as a foundation of a respectful, cooperative and progressive relationship to facilitate the development of the Turnagain project. The agreement addresses current needs in that it contains important commitments by both the Kaska Dena and Hard Creek toward environmental protection, economic opportunities and benefits, education and training.
Hard Creek is currently working toward developing a socioeconomic participation agreement with the Kaska Dena concerning development at Turnagain. This socioeconomic agreement is scheduled to be completed as part of the feasibility of the project. The explorer is also working on a memorandum of understanding with the Tahltan First Nations.
Inexpensive Highway 37 power Hard Creek Nickel hopes to obtain inexpensive power provided by the proposed Northwest Transmission Line along Highway 37 in northern B.C. The Turnagain project is about 70 kilometers east of Dease Lake, the northern extension of the proposed 287 kilovolt power line envisioned by the B.C. government.
British Columbia Premier Gordon Campbell told attendees of the AME BC Mineral Exploration Roundup in January that potential federal government infrastructure funds could be directed to permitting and potential construction of a power line in northwest British Columbia along Highway 37.
In September, Campbell announced C$10 million for engineering, environmental assessment and Aboriginal consultation for a power line from Terrace to Bob Quinn. The Highway 37 coalition has since been working with First Nations and government agencies to extend the project review to Dease Lake.
Jarvis told Mining News that power supplied by the proposed power line will have a huge effect on the economics of a mine at Turnagain. The Hard Creek CEO said power users in B.C. currently pay about 4 Canadian cents per kilowatt-hour.
The Mining Association of British Columbia reports that a proposed 50,000-tpd operation at Turnagain would consume about 78 megawatts of power.
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