Stars Align for Mount Milligan

Today’s much improved commodity market means many deposits that languished during the 1990s are being examined again. One of these is Mt. Milligan, in north-central British Columbia 155 km northwest of Prince George. This massive copper-gold deposit is under the command of Terrane Metals Corp.

The Mt. Milligan property first piqued interest in the 1930s, but it has taken until now for the stars and planets to align. Placer Dome Ltd., owners of the property from 1990-2005, took it all the way through the permitting process and was issued a Mine Development Certificate in 1991, but decided to put it to rest between 1998-2003 due to a depressed metal market. The company had just resumed work on the project when Barrick Gold, in late 2005, made a successful takeover bid. Placer’s Canadian assets (including Mt. Milligan) were sold to Goldcorp Inc. for US$1.48 billion.

In anticipation of Goldcorp selling off some very high quality properties, a group of mining entrepreneurs, all former Placer Dome geologists, formed Terrane Metals Corp. in 2006. Terrane Metals’ president and CEO is Rob Pease, P.Geo, FGAC, formerly Placer Dome’s general manager, Canada. He was responsible for managing all aspects of Placer’s Canadian exploration projects including Mt. Milligan. The rest of Terrane’s technical team is made up of seasoned professionals who for the most part have been involved at one time or another with Mt. Milligan and who shared a sense of unfinished business.

In early 2006, Terrane acquired 100% interest in Mt. Milligan plus interest in three other promising properties from Goldcorp for Cdn$120 million.

Given the correct metal market, Mt. Milligan is a deposit worthy of the loyalty that has been shown by the technical team of Terrane. Shortly before Barrick’s takeover, Placer Dome reported that, using the very conservative prices of US$450/oz for gold and US$1.25/lb for copper, the Mt. Milligan deposit hosts a measured and indicated resource totaling 206 million tonnes (t) grading 0.6 g/t Au and 0.247% Cu, containing 3.78 million oz of gold and 1.12 billion lb of copper. (Gold was fetching well over US$600/oz and copper had reached US$3.50/lb in mid-April 2007.)

The company’s first move was to initiate a multi-rig diamond drilling program designed to upgrade inferred resources into measured and indicated categories, and to collect bulk samples for metallurgical testing. Several of the holes in the Phase I drilling program intersected significant thicknesses of laterally continuous gold-copper mineralization that are outside the historic resource limits.

Several of the 23 Phase II drill holes intersected mineralization in the DWBX zone: a down-dropped, underexplored extension to the main Mt. Milligan deposit. This mineralized block, some 500 m long, 200 m wide and 100-200 m thick, also lies outside the historic resource estimate.

To date, 216,860 m of diamond drilling from 955 holes has defined a large open pit resource. The recently completed drill programs will support the feasibility study, to be completed in the fourth quarter of 2007. A key component of the study will be the completion of a revised and independent National Instrument 43-101-compliant resource estimate that will consider a number of new grade-tonnage development scenarios.

Because Placer had conducted meticulous work preparing the environmental study and the deposit formerly had been granted a development certificate, basically all that remains to be done is to update previous studies to the standards and conditions of today. Once these have been completed, Terrane will submit a new environmental impact assessment. The company expects to have all the permits and certificates in place for development by late 2008, with production commencing early 2011.

The deposit is well suited to large-scale open pit development, with a projected throughput rate of 60,000 t/d. The expected life of the mine is 15 years, and the capital cost is expected to be Cdn$800 million.

Mt. Milligan is in the McKenzie land use plan, an area zoned for mine development. It is midway between the communities of McKenzie and Fort St. James and is accessible by road, with rail lines and low-cost power in close proximity. There is also very strong support from .the provincial government and local governments including the communities of Fort St. James, Mackenzie and Prince George.

As Placer’s project manager, Pease had developed a good relationship with the two First Nations bands near Mt. Milligan back in the 1990s. Reconnecting with those bands is a top priority for Terrane. “We are committed to building relationships in which all involved parties benefit from the development of this mine,” says Pease.

Julie Domvile is a freelance writer based in Victoria, B.C., and can be reached at julie_domvile@shaw.ca