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Vol. 17, No. 46 Week of November 11, 2012
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining Explorers 2012: High-grade copper abounds at Ambler

NovaCopper adds 1B pounds to resource, 2012 drilling taps third deposit

Shane Lasley

Mining News

NovaCopper Inc. – formed as a 2012 spinout of NovaGold Resources Inc.’s Ambler project in Northwest Alaska – already boasts some 3.6 billion pounds of high-grade copper resources plus appreciable quantities of gold, silver, lead and zinc.

“This is an excellent start to NovaCopper’s life as a public company,” said NovaCopper President and CEO Rick Van Nieuwenhuyse.

In addition to some 90,624 acres of state, federal and patented mining claims blanketing the Ambler Mining District, NovaCopper received US$40 million in cash and NovaGold founder Van Nieuwenhuyse.

Continuing the work started by its predecessor, NovaCopper and NANA Regional Corp. are joined in a partnership designed to explore and develop Arctic and Bornite, two of the highest grade copper projects left on the planet, and seek similar deposits across 331,000 acres (134,000 hectares) of the Ambler District.

“Both parties are contributing resources to create the opportunity to take a consolidated and cost-effective approach to exploring and developing one of the richest and most-prospective copper districts in the world,” NovaCopper CEO Rick Van Nieuwenhuyse expounds on the alliance known as the Upper Kobuk Mineral Project.

The alliance partnership provides the Alaska Native regional corporation with the opportunity to benefit from the exploration and eventual development of the world-class Arctic deposit and other similar prospects across the 70-mile (110 kilometers) Ambler volcanogenic massive sulfide belt blanketed by NovaCopper’s 90,624 acres of state, federal and patented mining claims.

Arctic – the most advanced deposit of the Upper Kobuk Mineral Project – has an indicated resource of 19.45 million metric tons averaging 4.05 percent copper, 5.8 percent zinc, 59.55 grams per metric ton silver and 0.97 g/t gold. Additionally, the deposit has an inferred resource of 11.41 metric tons averaging 3.47 percent copper, 4.84 percent zinc, 46.75 g/t silver and 0.80 g/t gold.

In return, NovaCopper is afforded the opportunity to investigate Bornite, a copper-rich deposit situated about 17 miles (27 kilometers) southwest of Arctic, and explore other mineral prospects across a carbonate-hosted copper-cobalt belt that is hosted primarily on the lands owned by NANA.

Ruby Creek zone at Bornite contains an indicated resource of 6.8 million metric tons averaging 1.19 percent (178.7 million pounds) copper and an inferred resource of 47 million metric tons of 0.84 percent (883.2 million pounds) copper.

“You have both volcanism associated with the volcanogenic massive sulfide deposits like Arctic and you have the situation at Bornite, which is copper replacement in limestone,” explains the NovaCopper leader. “You are talking about a whole district here at Ambler and the exploration has only scratched the surface and it has already been very successful.”

To dig a bit deeper into the Upper Kobuk Mineral Project, NovaCopper launched a 17,209-meter drill program focused primarily on South Reef, a deeper target at Bornite about 250 meters west of the 1-billion-pound copper resource at Ruby Creek.

“Management believes that South Reef has the potential to become another world-class copper deposit, and that it complements very well our multi-billion-pound 7-percent-copper-equivalent endowment at the Arctic deposit. These deposits are unfolding in a way that makes the Ambler district one of the most exciting copper plays in the world,” said Van Nieuwenhuyse.

Advancing Bornite

An early priority of NovaCopper and NANA’s strategy at the Upper Kobuk Mineral Project is to advance the Bornite project to a stage that is on par with Arctic.

This began with a 5,900-meter program carried out by NovaGold in 2011. The first priority of this work was to confirm a historical resource calculated for the Ruby Creek zone at Bornite based on exploration completed by Kennecott Exploration Co. nearly half a century ago.

“Kennecott was looking for high-grade mineralization when they did most of this work back in the 1960s and 1970s, but they intersected a lot of 1 percent grades,” Van Nieuwenhuyse told Mining News.

Six holes drilled by NovaGold last year validated the historical work completed by Kennecott, including RC11-181, which cut 17.6 meters grading 8.4 percent copper. Overall this hole intersected four mineralized intervals totaling 122.3 meters averaging 2.3 percent copper. RC11-185 – more typical of the average grades in the Ruby Creek zone – cut 121.3 meters averaging 1.4 percent copper.

While the six holes drilled served the purpose of calculating the inaugural NI 43-101-compliant resource of 1.06 billion pounds of copper, the most exciting results of the 2011 program came in two exploration holes drilled into the nearby South Reef zone.

RC11-187, the first hole to target South Reef, cut a continuous 178 meters averaging 4 percent copper, including 34.7 meters at 12 percent copper.

“It is one of the best copper holes drilled in the world, ever!” said a beaming Van Nieuwenhuyse. “The fact that it is on a new target that we now call the South Reef, makes it even more encouraging.”

South Reef – which is separated from Ruby Creek by a major northeast-trending fault known as Iron Mountain – starts at about 300 meters below surface, making it substantially deeper than the 1-billion-pound copper resource.

After losing several holes before reaching target depth, NovaGold tapped the zone with a second hole.

RC11-194, drilled 500 meters along strike to the north of hole 187, cut 110.6 meters of 2.6 percent copper.

Given the grades, thicknesses and apparent strike-extent, South Reef is shaping up to be a substantial addition to the Bornite and is the primary focus of NovaCopper’s 2012 drill program.

Results from the first six holes of 2012 continue to demonstrate the high-grade tenor of the new zone:

•RC12-202 intersected three mineralized intervals with a composite total of 50.1 meters averaging 3 percent copper, including a higher grade interval of 7.8 meters grading 12 percent copper;

•RC12-201 intersected four mineralized intervals with a composite total of 112.5 meters averaging 2.4 percent copper, including a higher grade interval of 12.6 meters grading 9.5 percent copper;

•RC12-198 intersected four mineralized intervals with a composite total of 84.7 meters averaging 2 percent copper, including a higher grade interval of 8.5 meters grading 6.4 percent copper;

•RC12-195 intersected three mineralized intervals with a composite total of 74.5 meters averaging 1.2 percent copper, including a higher grade interval of 22.1 meters grading 3.1 percent copper;

•RC12-197 intersected two mineralized intervals with a composite total of 83.7 meters averaging 2.1 percent copper, including a higher grade zone of 46.6 meters grading 2.7 percent copper; and

•RC12-196 intersected three mineralized intervals with a composite total of 86.8 meters averaging 1.5 percent copper, including a higher grade interval of 64.8 meters grading 1.7 percent copper.

Drilling at South Reef has outlined a 300-meter-by-700-meter northeast trending zone of copper mineralization that remains open to the north and east and is partially open to the south.

Developing the district

Some 1,750 meters of the 2012 program tested Sunshine, a VMS prospect about 12 kilometers (7.5 miles) west of Arctic. NovaCopper said historic drilling at Sunshine has identified substantial widths of massive sulfide mineralization in the same stratigraphic horizon as Arctic.

“Sunshine is not too far from Arctic, and there are some obvious synergies there. But there are literally a dozen other identified massive sulfide targets in the belt,” Van Nieuwenhuyse said.

Seeking other drill targets similar to those NovaCopper is drilling at Bornite, the 2012 program consists of extensive surface exploration of the roughly 11-mile (18 kilometers) belt of prospective stratigraphy associated to the carbonate replacement deposits.

Two known mineralized occurrences west of Bornite – Aurora Mountain and Pardner Hill – along with broad areas of hydrothermal dolomite and anomalous soil geochemistry occur along the belt. NovaCopper said surface exploration will utilize surface and down-hole induced polarization geophysics to identify new targets and further delineate extensions of known mineralization.

An initial 60 line-kilometers of IP, 25 line-kilometers of soil sampling and geologic mapping were carried out to gain a better handle on the geologic controls to mineralization and target generation in the district.

Though primarily focused on exploration, NovaCopper’s US$16.5-million program at the Upper Kobuk Mineral project in 2012 continued the engineering and metallurgical work at Arctic as well as initial metallurgical testing of Bornite ore.

A preliminary economic assessment completed by SRK Consulting in April 2011 and updated for NovaCopper in 2012 investigates a 4,000-metric-ton-per-day underground operation at Arctic producing 1.7 billion pounds of copper, 2 billion lbs. zinc, 291 million lbs. lead, 266,000 ounces gold and 22 million ounces silver over a 25-year mine life.

According to the revised PEA, Arctic demonstrates a base case post-tax net present value (8 percent discount) of C$533 million with an internal rate of return of 26 percent. This scenario assumes US$2.50/lb. copper, US$1.05/lb. zinc, US$1.00/lb. lead, US$20 per ounce silver and US$1,100/oz gold.

Plugging in May 9 metals prices (US$3.83/lb. copper, US90 cents/lb., US95 cents/lb. zinc, US$1,600/oz. gold and US$32/oz. silver) the base case post-tax net present value (8 percent discount) nearly doubles to C$1 billion with an internal rate of return of 37 percent.

While the PEA contemplates an underground mine at Arctic, NovaCopper is investigating the potential of an open-pit operation at the VMS deposit.

Van Nieuwenhuyse said the examination of various mining scenarios at Arctic is one component of NovaCopper’s broader evaluation of the entire Upper Kobuk Mineral Project.

“We are looking at a variety of opportunities with the concept of developing the district,” he said.



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NovaCopper Inc.

NCQ: NYSE/TSX

Chairman: Thomas Kaplan

President and CEO: Rick Van Nieuwenhuyse

Project Manager, UKMP: Scott Petsel

Copper: Bornite

Polymetallic VMS: Arctic

Polymetallic VMS: Sunshine

Cash and short-term deposits: US$38.7 million (at May 31, 2012)

Working capital: US$37.57 million (at May 31, 2012)

Market capitalization: US$122.7 million (at Aug. 26, 2012)

PO Box 24

Suite 2300 - 200 Granville Street

Vancouver, BC, Canada V6C 1S4

Tel: 604-638-8088 • Fax: 604-669-6272

www.novacopper.com