Resources

Mineral Resources

Open pit constrained mineral resources for the Ootsa project contain 1.1 billion pounds of copper and over 1 million ounces of gold in the measure and indicated categories as indicated in the table below.

The mineral resource model was developed utilizing a drill hole database comprised of 26,995 assays from 258 drill holes.  Drill hole assay data was composited into 2 m intervals and a block model with 10 m by 10 m by 10 m block size was constructed using Gemcom modeling software.  Mineralized domains for all deposits were constrained incorporating geological, structural, and lithological parameters and using a $10/t NSR cut-off value.  Within these domains, a $8.50/t NSR cut-off value was applied to define the extent of mineralization with reasonable prospects for economic extraction.  Within these domains, grades for copper, gold, molybdenum, and silver were estimated using inverse distance squared (ID2) grade interpolation guided by geostatistical analysis.  The resulting resource model was subject to pit optimization using a Lerchs-Grossman algorithm to define a pit constrained mineral resource as detailed in the table below.

Ootsa Project Pit Constrained Mineral Resource Estimate at $8.50/t NSR Cut-off Value

Deposit

Category

Tonnes (‘000’s)

CuEq
%

Cu %

Au
 g/t

Mo
 %

Ag g/t

CuEq
M lbs

Cu
M lbs

Au
K oz

Mo
M lbs

Ag
K oz

Ox

Measured

30,492

0.37

0.26

0.04

0.028

1.5

249

175

39

19

1,471

Indicated

3,204

0.32

0.23

0.04

0.021

1.4

23

16

4

1

144

M&I

33,696

0.37

0.26

0.04

0.027

1.5

272

191

43

20

1,615

East Seel

Measured

22,165

0.43

0.28

0.26

0.002

2.5

210

137

185

1

1782

Indicated

1,422

0.38

0.28

0.14

0.003

4.4

12

9

6

0

201

M&I

23,587

0.43

0.28

0.26

0.002

2.6

222

146

191

1

1,983

West Seel

Measured

134,491

0.37

0.21

0.16

0.022

3.2

1,097

623

692

65

13,837

Indicated

32,415

0.36

0.21

0.13

0.024

2.9

257

150

135

17

3,022

M&I

166,906

0.37

0.21

0.15

0.023

3.1

1,354

773

827

82

16,859

Inferred

5,212

0.30

0.18

0.09

0.019

2.6

34

21

15

2

436

 

Measured

187,148

0.38

0.23

0.15

0.021

2.8

1,568

934

916

85

17,089

Total

Indicated

37,041

0.35

0.21

0.12

0.023

2.8

286

175

146

19

3,368

 

M&I

224,189

0.37

0.22

0.15

0.021

2.8

1,854

1,109

1,062

104

20,457

 

Inferred

5,212

0.30

0.18

0.09

0.019

2.6

34

21

15

2

436

The current technical report supporting the resource statement and PEA is available on SEDAR or the Company’s website and has an effective date of January 2016.  The resource estimate uses $8.50 per tonne NSR cut-off value.  Mineral resources are not mineral reserves and by definition do not demonstrate economic viability. There is no certainty that all or any part of the mineral resource will be converted into mineral reserves.  A ‘Measured Mineral Resource’ is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.   An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.  Copper Equivalent (CuEq) calculations are based on base case metal price (US$3/lb Cu, US$1260/oz Au, US$10.30/lb Mo, and US$17/oz Ag) and process recovery assumptions, and take into account smelter payable rates and refining costs.  M&I = measured and indicated. The resource update and Preliminary Economic Assessment was completed by P&E Mining Consultants Inc. in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects.

The $8.50/t NSR resource cut-off value grade was derived from Sep 30/15 three year approximate trailing average US metal prices of: Cu $3.25/lb, Au $1,350/oz, Mo $12/lb and Ag $22/oz and a US$:CDN$ exchange rate of 0.85. Process recoveries used were Cu 90%, Au 70%, Mo 70% and Ag 65% with respective smelter payables of 96%, 96%, 96% and 90%. Refining charges in US$ were Cu $0.05/lb, Au $5/oz and Ag $0.50/oz. C$ operating costs used were $2.25/t for mineralized material and waste mining, $1.50/t for overburden mining, $7.50/t for processing and $1.00/t for G&A. An optimized pit shell was utilized for resource reporting that utilized 45 degree slopes and an average mineralized material bulk density of 2.72 t/m3.

The resource update and Preliminary Economic Assessment have been completed by P&E Mining Consultants Inc. in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects.  The updated mineral resource estimate has been prepared by Brian Ray, P.Geo. and Eugene Puritch, P.Eng., both Independent Qualified Persons as defined by National Instrument 43-101, and has an effective date of January 1, 2016.  Dr. Shane Ebert, Ph.D., P.Geo. is the Qualified Person for Surge Copper and has reviewed and approved this content.

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