Name of the Project
Black Butte copper project.

Location
White Sulphur Springs, in Montana, in the US.

Project Owner/s
Sandfire Resources America, a subsidiary of Sandfire Resources.

Project Description
Sandfire Resources America has announced the results of a feasibility study on the Johnny Lee deposit - the cornerstone of the Black Butte project. The deposit comprises the upper copper zone and the lower copper zone; both are characterised as being high-grade, laying at low angles and with relatively narrow widths. All deposits have anomalous silver and cobalt mineralisation; however, copper is the only economic product considered in the feasibility study.

The feasibility study is underpinned by a maiden reserve for the Johnny Lee deposit of 8.8-million tonnes at 2.6% copper for 226 100 t of copper.

The deposit underpins an eight-year mine life and is designed to be mined at 1.2-million tonnes of ore a year. Forecast production totalling 805 000 dry metric tonnes of copper concentrate containing 189 500 t of copper metal is forecast over the life-of-mine.

The Johnny Lee deposit will be accessed by one main ramp driven from surface. The mining method will be a combination of drift-and-fill and cut-and-fill, depending on the height of the orebody. Metallurgical testwork indicates that the copper in the upper and lower copper zones can be recovered to a concentrate by crushing, grinding and froth flotation processes. The upper copper zone ore requires a fine primary grind (38 µm P₈₀) and a very fine regrind (10 µm P₈₀) of the rougher concentrate to achieve optimised recoveries. The lower copper zone ore does not require such fine grinds to achieve optimised recoveries. However, as it will be blended with upper copper zone ore in small volumes, the blended ore will be treated using the process as optimized for upper copper zone ore.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 5% discount rate, of $124.9-million and an internal rate of return of 17%, with a payback of three years from the commissioning of the mine.

Capital Expenditure
$247.7-million.

Planned Start/End Date
Not stated.

Latest Developments
Sandfire Resources America, a subsidiary of Sandfire Resources, has been issued a water permit for the Black Butte copper project from the state of Montana Department of Natural Resources and Conservation (DNRC).

The permits issued by the DNRC authorise the company to divert groundwater for use in the mining of the Johnny Lee copper deposit and to store high-water flows for stream flow maintenance.

The DNRC has also approved Sandfire’s change applications to use six existing water rights to mitigate surface water flow reductions resulting from the groundwater diversion.

While the company received objections to the water use permits and the mitigation changes, Sandfire has said that it was able to resolve all but one of the objections through negotiated settlements, which may not be challenged as agreed upon by the parties.

The one remaining objection to the groundwater permit, which is pending before the Meagher County district court, relates to the DNRC’s interpretation of whether mine dewatering constitutes “waste” under the Montana Water Use Act.

“We are optimistic that the remaining objection to the groundwater permit will be resolved in our favour,” senior VP Jerry Zieg has said.

One other regulatory hurdle to Phase 2 construction will be resolving the narrow issues going in front of the Montana Supreme Court regarding the mine operating permit.

Regulatory finalisation will be followed by the requirement of Sandfire Resources America’s board’s approval and securing financing.

Key Contracts, Suppliers and Consultants
None stated.

Contact Details for Project Information
Sandfire Resources America VP of communications Nancy Schlepp, tel +1406547 3466 or email nschlepp@sandfireamerica.com.