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A Vancouver-based junior miner will make a production decision next year on whether to restart a mothballed open pit base metals mine near Sudbury.
Management at Prophecy Platinum are in the midst of re-examining an old feasibility study and the operating and milling costs for the Shakespeare Mine to determine if the economics make it worthwhile to proceed with the project. The nickel-copper-platinum group metals project is located 70 km west of Sudbury near the town of Webbwood.
“It’s a good asset for us; it’s just sitting in the ground parked in neutral,” said John Sagman, Phophecy’s senior vice-president and chief operating officer. The company intends to wrap up feasibility later this year and and make a decision by the second quarter of 2014.
“From our perspective it’s not a metal price issue, it’s an operating cost issue,” said Sagman. Phophecy, which acquired the mine following a merger with Ursa Major Minerals last year, is looking to carve between 20 and 25 per cent in mining, transportation and milling costs.
Sagman said the overall mineral grades are good but the mine’s not sustainable in the long term when benchmarked against other similar operations.
Shakespeare contains a probable mineral reserve of 11.8 million tonnes of platinum group metals (PGM), gold, nickel and copper. More than 90 per cent of the reserves remain in the production plan.
The company recently closed $5.9 million in equity financing with a portion of that earmarked for the Shakespeare feasibility study, last updated by Ursa Major in 2008.
Under the Ursa Major flag, the operation had run into all kinds of trouble. Two years ago, that company was beset with a shareholder revolt to replace the board followed by a decision to halt operations when a processing agreement couldn’t be renegotiated with Xstrata Nickel to use its Strathcona mill in Sudbury.
Ursa Major had outsourced all aspects of the operation to contractors including equipment rentals and labour, and with no processing mill on site, ore was trucked 100 kilometres up bush roads to Strathcona.
“It made it difficult to run the operation that way,” said Sagman.
One item strongly being considered is the construction of an on-site mill and concentrator. On the logistics side, Prophecy is examining options like the Huron Central Railway, a Sault Ste. Marie-Sudbury short line, which operates only a few kilometres away.
“We may look at that but then would have to reach an agreement with Vale to use their mill,” said Sagman. “We could use it for overseas shipment of concentrate. That’s definitely a consideration.
“The way we’re leaning (is) we need a site mill to make it a long-term sustainable operation. It has potential because we have some good exploration properties over and above the mine that are within range so we can keep that mill running.”
While Phophecy’s main asset is its Wellgreen nickel-PGM property in the Yukon, Shakespeare is categorized as a “priority” project because it’s a fully-permitted operation.
“That’s one of the biggest advantages of this property; it’s got a quick startup,” said Sagman. When operating, Shakespeare is pegged to annually produce 25,000 ounces of PGM and gold, 8 million pounds of nickel and 10 million pounds of copper.
The company has an Impact and Benefit Agreement with the nearby Sagamok Anishnawbek First Nation.
“Our main goal is to get the site up and running and once we decide to say yes, and make a capital investment, then that opens up all sorts of scenarios on how to finance it, etc.,” said Sagman. “We want to get the feasibility study reviewed, completed, and then decide where we’re going to go with this.”