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 Project Summary
The Minto Mine is a high grade copper-gold mine that commenced commercial production on October 1, 2007. It is located 240km north of Whitehorse, Canada, and is owned 100% by Minto Explorations Ltd., a wholly owned subsidiary of Sherwood Copper Corporation. The Minto Mine is an open pit operation with conventional crushing, grinding, and flotation to produce copper concentrates with significant gold and silver credits. Concentrates are exported via the Port of Skagway, Alaska, to smelters in Asia for treatment and sale. In December 2007 the results of an independent pre-feasibility study for the expansion of the Minto copper-gold mine were released. This study increased reserves and laid out a path for significantly increased copper production, commencing immediately, while materially enhancing project economics. In addition, significant exploration potential exists on the Minto property. Aggressive exploration programs conducted by Sherwood have met with considerable success, with the 2006 and 2007 exploration drill programs resulting in a 140% gain in contained copper in mineral resources, and drilling continuing into 2008. Sherwood acquired Minto Explorations and all other project interests, including a partially constructed but dormant mine, in June 2005. Within two years from acquisition, Sherwood re-drilled the resources to reserve standards, completed a bankable feasibility study, arranged project financing, built a new mine and reached commercial production. Click here for Pre-feasibility Highlights Overview
Project Overview The Minto Mine is an operating high-grade, open pit copper-gold mine located in the Whitehorse Mining Division, Yukon Territory, Canada, about 240km northwest of the city of Whitehorse. Sherwood Copper Corporation, through its subsidiary, Minto Explorations Ltd., has a 100% interest in the Minto Mine. Access to Minto is via the Klondike highway to Minto Landing, where boat, barge or ice-bridge gives access across the Yukon River to the head of an all-weather, production standard gravel road constructed to the site. Project highlights include:
2008 Operating Results The first quarter of 2008 was the second quarter of commercial production at the Minto Mine. During the quarter, Sherwood completed commissioning the Phase 2 mill expansion increasing mill throughput from 1,563 tonnes per day to 2,400 tonnes per day by mid-March. Key operating statistics for the Minto Mine in the first quarter of 2008 and the fourth quarter of 2007 are presented below:
** Gold grades for ore mined are estimated from the reserve block model, whereas copper and silver grades are based on blast holes. 2007 Operating Results Commercial operations commenced at the Minto mine on October 1, 2007. Key operating statistics for the Minto Mine in the third and fourth quarters of 2007, and for the entire year (including waste stripping for the entire 12 months and limited concentrate production in the second quarter of 2007), are presented below.
** Includes capitalized pre-stripping treated as pre-production costs in the DFS. *** Gold grades for ore mined are estimated from the reserve block model, whereas copper and silver grades are based on blast hole assays. This production level is less than set out in the 2006 detailed feasibility study but in line with revised forecasts set out in the 2007 pre-feasibility study as a result of decisions to (1) process lower grades during the commissioning and ramp up of the mill in order to avoid unnecessary metal losses until recoveries reached design levels and, (2) to construct the Phase 2 mill expansion earlier than contemplated in the detailed feasibility study, resulting in some production being deferred into 2008 as the plant expansion was constructed and tied in. Production The Main/Area 2 combined mine plan focuses on accessing and milling the high-grade ore first, with lower grade material sent to stockpiles for blending and processing later in the mine life. The following table sets out the copper, gold and silver in concentrates and estimated payable metal detailed in the December 2007 Pre-feasibility study. Pre-feasibility Study Production Schedule*
*Subject to permit amendments As part of its on-going process of optimizing production from the Minto Mine, Sherwood has rescheduled mining of the open pit in order to bring high grade copper-gold production forward from 2010 into 2009 and the latter part of 2008. This rescheduling is expected to result in similar production in 2008 to that previously forecast (approximately 55 million pounds of copper) but increased production in 2009 and reduced production in 2010 versus what was outlined in the Pre-feasibility Study. Minto Explorations is seeking amendments to its current operating permits from the Yukon government in order to increase production and modify operating parameters to accommodate these and other proposed operational improvements. In addition, Sherwood may include the installation of a gravity gold recovery plant in the grinding circuit in order to recover any free gold that may be present, however no benefit from this optimization has been assumed in the production forecast since the benefits of this will have to be demonstrated through production. Resource and Reserve Estimates Mineral Resources (0.5% Copper cut-off and inclusive of reserve)* based on drilling to the end of 2006:
**Totals may not add exactly due to rounding Mineral Reserves (0.62% Copper cut-off)* based on drilling to the end of 2006:
**Totals may not add exactly due to rounding *Click here for resource disclosure. Resource Expansion In 2006, Sherwood geologists identified a possible extension to the main deposit, 130m south of the pit currently under development. An aggressive drill program in 2006 resulted in the discovery and definition of a significant new resource called Area 2. Within 20 months from discovery, Area 2 was converted into a reserve that supports a 45% increase in mill throughput and a 43% increase in total project copper and gold production. During 2007, significant new copper-gold mineralization was discovered in the southwest corner of Area 2, Area 118, Ridgetop, Gap, Copper Keel S. and Airstrip SW. New mineral resource estimates were completed for the Area 118 and the Ridgetop deposits, while resource estimates for the Main Minto and Area 2 deposits were updated to incorporate the results of 101 new holes drilled across these four deposits in 2007. Contained copper in mineral resources increased by 50% and precious metals by approximately 40% as a result of drilling in 2007. This follows on from a 60% gain in contained copper in mineral resources based on drilling in 2006, for a 140% gain in copper resources in two years. 2008 in-fill drill programs are underway at the Area 118 and Ridgetop deposits to upgrade the confidence level in these areas. Resource additions could potentially support additional production expansions or an increased mine life. In addition, other high priority target areas are being drilled in the 2008 exploration drill program. Sherwood is also planning to evaluate the resource potential at cut-offs below 0.5% copper, to determine the overall potential of this mineralized system. Processing The process facility built at Minto utilizes a conventional circuit comprised of a crusher, SAG and ball mills for grinding, and flotation to produce concentrates that are filtered and stockpiled in a storage facility for later shipping to the port of Skagway, Alaska, for export overseas. A filtered tailings system is being used to mitigate reclamation costs by allowing dry stacking of tailings. The Minto concentrator initiated production ahead of schedule in May 2007 with a design daily production rate of 1,563 tonnes per day. A Phase 2 mill expansion was completed in mid-December 2007, six months ahead of schedule, increasing throughput to 2,400 tonnes per day. Commissioning was completed in February 2008 and ramp up to full Phase 2 production capacity was completed in mid-March 2008. This should result in significant copper-gold production in 2008 and beyond. A Pre-feasibility Study (completed in December 2007) incorporated the economic potential of the Area 2 deposit and laid out the basis for a Phase 3 mill expansion to 3,500 tonnes per day. The throughput increase is achievable by utilizing the benefits of a coarser grind and should result in increased copper and gold production commencing in 2009, as laid out in the PFS. Exploration subsequent to the resource estimates used in the PFS suggests additional potential beyond that laid out in the PFS. Metallurgical Information Metallurgical programs undertaken indicate recoveries from the Main Minto deposit averaging approximately 94% for copper, 74% for gold and 95% for silver. The Main Minto deposit is expected to produce a high grade concentrate, averaging approximately 36% copper, 10g/t gold and 150g/t silver. The concentrates are forecast to be free of any penalty level elements. By using a coarser grind, a mill expansion from 2,400 to 3,500 tonnes per day is targeted for 2009. To achieve similar metallurgical recoveries and improve concentrates grades when using a coarser grind, the addition of a regrind mill for the rougher copper concentrate is required. Test work indicates that the inclusion of a regrinding stage results in a similar average copper recovery of 95%, a copper concentrate grade of 43.6% copper, an average gold recovery of 78%, marginally higher by 3% in comparison to previous test work, and an average silver recovery of 86%, about 9% lower that previous test work. Test work on Area 2 at the coarser primary grind and regrind, resulted in copper recoveries of between 90% and 94%, averaging 92%, with the exception of the P Zone. Gold recovery at the coarser primary grind was lower at an average of 64% than the standard Minto grind, or about 11% lower. On average, the copper concentrate grade was about 3% higher at 41.3% copper at the coarser primary grind with regrind in comparison to the standard Minto primary grind. Silver recovery averaged 81%, or 14% lower than the Minto Main deposit. The concentrates are forecast to be free of any penalty level elements. Price Protection/Hedging As of March 31, 2008, Sherwood entered into forward sales agreements for 49,924 tonnes (approximately 110.1 million lbs) of copper, 54,095oz of gold and 602,749oz of silver for delivery between April 2008 and October 2011 at prices well above those assumed in the pre-feasibility study announced December 12, 2007. This brings the total hedging to approximately 50 percent of the first four years production which provides significant downside protection yet considerable upside opportunity as production plans increase. Total hedging represents less than 20% of Sherwood's currently defined in situ mineral resources. In addition, Sherwood has entered an off-take agreement for the sale of its concentrates at very attractive terms. The tables below summarize the forward metal sales position outstanding at March 31, 2008: Copper Forward Sales
Gold Forward Sales
Silver Forward Sales
Area 2 Pre-feasibility Study Click here for full Pre-feasibility Study Highlights A Pre-feasibility Study ("PFS") completed in December 2007 laid out a path for significantly increased copper production and enhanced project economics. The PFS looked at the economic potential of the Area 2 deposit, and incorporated several other concurrent Minto Project improvements that were identified post the August 2006 Feasibility Study, including the implementation of a coarser grind flotation feed. The PFS estimates a 45% increase in mill throughput, from 2,400 tonnes per day to 3,500 tonnes per day, and a 43% increase in total project copper and gold production with increased copper and gold production. The PFS represents an interim update on the Minto Project with resource estimates as of the end of 2006 and costs as of the end of 2007. However, continued exploration success in 2007, which could result in further reserve increases beyond those outlined in the PFS, and other optimization opportunities, suggest that additional value remains to be extracted from the Minto Project and Sherwood will continue to pursue the crystallization of these value opportunities. Based on the results of this study, Minto Explorations ("MintoEx") is seeking amendments to its current operating permits from the Yukon government in order to increase production and modify operating parameters to accommodate these and other proposed operational improvements. Project Opportunities Sherwood intends to pursue several project optimizations which may continue to enhance project economics. These are:
Permitting The Minto Mine is currently permitted to process up to 912,500 tonnes of ore per year, or 2,500 tonnes per day. Increased mill throughput to 3,500 tonnes per day, and a new pit at Area 2, would require amendments to existing permits. Sherwood has made formal application for the required permit amendments and plans to work closely with Yukon Government, Selkirk First Nation and other stakeholders through these permit amendments. Exploration 2007 exploration drilling focused mostly on nine separate exploration target areas in addition to a small program dedicated to geotechnical/metallurgical drilling at the Main and Area 2 deposits as part of the 2007 Pre-feasibility study. 101 exploration and geotechnical drill holes were completed for 23,292 metres, including ten holes drilled for geotechnical and metallurgical purposes; five in the Main pit and five at the Area 2 deposit. The objective of the 2007 exploration program was to more fully define the limits of the Area 2 deposit and provide technical information for the PFS, but mostly to broadly test a wide swath of the Minto property to the south, west and between the Minto and Area 2 deposits. Significant new copper-gold mineralization, which led to a 50% increase in contained copper in mineral resources and a 40% in increase in precious metals, was discovered in the southwest corner of Area 2 as well as the Area 118 and Ridgetop deposits. Copper-gold mineralization was also discovered in the Copper Keel and Airstrip prospects and in the Gap between the Minto Mine and Area 2. These updated resources were not incorporated into the December 2007 Pre-feasibility study. 2008 in-fill drill programs are underway at the Area 118 and Ridgetop deposits to upgrade the confidence level in these areas. In addition, other high priority target areas are being drilled in the 2008 exploration drill program. Sherwood has signed a Memorandum of Understanding ("MOU") with Firestone Ventures Inc. whereby Sherwood's wholly owned subsidiary, Minto Explorations Ltd. ("MintoEx"), will receive an equity interest in a new public company to be created by Firestone in exchange for contributing four sets of mineral claims in the Minto region, access to MintoEx's extensive Yukon exploration database and participation in a regional exploration alliance. The new company, Northern Tiger Resources Inc., would give Sherwood's shareholders exposure to an exploration company focused on exploration targets generally located outside of, but in proximity to the Minto Mine property in central Yukon. In addition to its equity holdings in Northern Tiger, under the terms of the MOU, MintoEx would retain back-in rights to acquire a 65% interest in any of Northern Tiger's projects located within a 50 km radius that are found to have mineralization amenable to processing in MintoEx's existing Minto Mine facilities. Details regarding the nature and timing of this transaction are currently being finalized by Sherwood's and Firestone's management, and will be subject to Northern Tiger completing a successful private placement and obtaining required TSX-V, court, bank and regulatory approvals. Resource Disclosure All mineral resources reported herein were estimated by Lions Gate Geological Consulting Inc. (LGGC). Susan Lomas, P. Geol. of LGGC is the Qualified Person under National Instrument 43-101 responsible for the mineral resource estimates. Mineral reserves were calculated by Minto Explorations Ltd's geology and engineering staff under the supervision of Dan Russell, P. Eng. who is the Qualified Person under National Instrument 43-101 responsible for the mineral reserve estimate. The Minto Main deposit reserve estimate was compiled using the updated mineral resource model provided by LGGC, hereby referred to as the "Model". The Model was imported into Mintec's MineSight(r) software for the reserve calculation. The mineral resource estimate was verified using MineSight(r) to ensure the import was successful. The mineral reserve calculation was bounded by the 2007 year-end survey surface (122007 YE Pit Surface.msr) and the most current ultimate pit design surface (ph5 nov1.msr). Furthermore, a cut-off grade of 0.62% Copper was used and no dilution or recovery factors were employed. The absence of these factors is justified on account of historical performance showing good mining reconciliation against the past model. The mineral reserve summary is based on measured and indicated mineral resource classifications in the model only, totalled within ore zones 2, 4, 5, and 8 in the Minto Main deposit (as established by in the December 2007 Pre-feasibility Study), and bounded by the aforementioned surfaces and assumptions. Mineral resource categories and definition of ore zones in the Model were established by the relevant QP's for each resource model, as defined herein. Details of the historical Area 2 mineral resource and reserve estimate are provided in the Technical Report for the Minto Pre-feasibility study, available on Sedar, the results of which were announced on December 12, 2007. The current Area 2 mineral reserves are based on this historic mineral resource and have not been updated to reflect the increased Area 2 mineral resource discussed in this release nor the results of drilling in 2008. Mineral Resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied. Pre-feasibility Background A Definitive Feasibility Study ("DFS") on the Minto Main deposit was conducted in 2006 by Hatch and positive results of the study led to the construction of the mine and mill. Commercial production was declared on October 1, 2007 with ore being extracted exclusively from the Main pit. In 2006, Sherwood geologists identified a possible extension to the main deposit, 130m south of the pit currently under development. An aggressive drill program was conducted which resulted in the discovery and definition of a significant new resource called Area 2. To assess the economic potential of the Area 2 resource, a Pre-feasibility Study ("PFS") was commissioned under the supervision of SRK Consulting (Canada) Inc. Expanded Scope In addition to looking at the economic potential of the Area 2 deposit, the study was expanded to incorporate several other concurrent Minto Project improvements that were identified post-DFS, including:
Highlights The PFS was completed in December 2007 and laid out the basis for production from the Area 2 deposit at a higher mill throughput than was defined in the 2006 DFS completed by Hatch Ltd. The PFS also incorporates a number of additional post-DFS optimizations. Highlights of the PFS, as compared to the DFS include the following:
The PFS represents an interim update on the Minto Project with resource estimates as of the end of 2006 and costs as of the end of 2007. However, continued exploration success in 2007, which could result in further reserve increases beyond those outlined in the PFS, and other optimization opportunities, suggest that additional value remains to be extracted from the Minto Project and Sherwood will continue to pursue the crystallization of these value opportunities. Permitting It is envisioned that, based on the results of this study, Minto Explorations will seek amendments to its current operating permits from the Yukon government in order to increase production and modify operating parameters to accommodate these and other proposed operational improvements. Economics The PFS costs were based on, in order of preference, actual contract costs, Minto 2007 and 2008 budget estimates and the 2006 DFS estimates. The principal differences between the 2006 DFS, 2007 PFS are set out in the table below, which illustrates both the Base Case and Forward Case. Comparison of 2006 FS and PFS (Base Case & Forward Case)
As noted above, the DFS used flat metal prices throughout the life of the study, whereas the PFS Base Case uses the same metal prices (US$2.00/lb Cu, US$550/oz Au and US$9.00/oz Ag) for unhedged production but actual forward contract pricing for the metal forward sold. The Forward Case uses a conservative forward case of the current forward copper prices (which decline over time due to backwardation) but the current spot prices for gold and silver (without the benefit of the contango in these commodities) for unhedged production, actual forward contract pricing for the metal forward sold, and a US$ at parity with the Canadian dollar. Several opportunities outside of the PFS study remain to be evaluated. Included in these opportunities is the potential to add additional reserves through continued exploration, further optimization of the mine plan, improved waste management to reduce costs and underground mining potential for deeper, higher grade areas. Unless otherwise stated, all reporting is in Canadian dollars and metric units. To view the full Area 2 Pre-feasibility Study, please click here. Feasibility
Sherwood completed its feasibility study in July, 2006 and updated it in August, 2006 to include a number of project optimizations. The project demonstrates robust economics, supporting Sherwood's prior decision to accelerate the development schedule of the Minto mine. A pre-feasibility study incorporating several post-feasibility project optimizations is scheduled for completion by the end of 2007. Feasibility Highlights The following sets out the highlights of the Feasibility Study prepared by Hatch Ltd. and certain other consultants, plus details of related financial aspects of the Minto Project based on the August 28, 2006 announcement:
The Minto deposit is an open pit mining operation with conventional crushing, grinding and flotation to produce high-grade copper concentrates with significant gold and silver credits. Concentrates are being exported via the port of Skagway, Alaska, to smelters in Asia for treatment and sale. The Detailed Feasibility Study prepared by Hatch Ltd. evaluated the recommencement of development at the high-grade Minto copper-gold project, and incorporated several material changes relative to previous designs. Most significant among the changes are accelerated pre-stripping to access high grades sooner, boosting near term production, expansion of the mill by more than 50% during the first year of operations, and stockpiling of all low grade (less than 1% copper) material during the first six years of operations in order to maintain head grades in the 2.5% copper range. Results from recently completed exploration drilling at Area 2 indicate excellent potential for the definition of a significant resource, a resource that could materially extend the operating life of the Minto Mine at higher grades than planned in years seven and later. Several opportunities outside of the feasibility study remain to be evaluated. Included in these opportunities is a switch to grid power, optimized mine scheduling, forward sales, geotechnical optimizations, on-going metallurgical test work to reduce operating costs and increase mill throughput, favorable TC/RC's, and a trial gravity circuit to recover coarse visible gold which has been encountered in prior drill programs. A pre-feasibility study incorporating these project optimizations is scheduled for completion by the end of 2007. Unless otherwise stated, all reporting is in Canadian dollars and metric units.
Exploration Programs 2008 Exploration Program Sherwood has budgeted a $4.4 million, 20,000 metre drill program for 2008 with the following priorities:
To date, results have been reported from thirteen holes drilled in the Upper Minto Valley, a previously unexplored and large area west of the Minto and Area 2 deposits. New copper-gold intercepts were encountered opening up potential for discoveries in previously unexplored areas on the Minto property. Drilling has now moved on to other priority areas identified in 2007, including possible extensions to the Area 2 deposit, further definition of the Area 118 and Ridgetop discoveries to increase the resource confidence level, as well as exploring additional targets. The 2008 exploration program is a component of our overall strategy to maximize the value of the Minto Mine by developing additional high grade reserves that could justify further increases in production by increasing mill throughput. 2008 Drill Hole Location Map 2007 Exploration Program Sherwood's successful 2007 exploration program delivered high grade copper-gold mineralization from a number of targets. The program was carried out in two phases and was comprised of 91 exploration drill holes and 10 geotech/metallurgical drill holes totalling 23,292 metres of diamond drilling. Significant new copper-gold mineralization was discovered at the Area 118, Copper Keel, Airstrip and Ridgetop prospects and in the Gap between the Minto Mine and Area 2. Each of these areas has the potential to provide additional near surface resources beyond those considered in the December 2007 pre-feasibility study. Mineral resource estimates incorporating the results of the 2007 drilling are underway. In addition to near surface mineralization, several deeper high grade intersections at the Minto Mine are opening up the vertical dimension to this highly prospective property, a dimension that has received little exploration attention in the past. Highlights of each phase are as follows: Phase 1 Highlights: Phase 1 was completed in May 2007 and consisted of six deep exploration holes totalling 2,259m and five metallurgical drill holes totalling 443m.
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