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BC Miners Poised to Find Lucrative Dance Partners: Yellowhead Mining's Copper Project

Jan. 24, 2011 2:45 PM ET
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ANALYSIS ProspectingJournal.com – January 24, 2011 – VANCOUVER, BC - What could feasibly have be seen as an opportunity lost nearly 40 years ago, copper's resurgence in British Columbia is not only a welcome trend for the mining sector, but the province as a whole. Mistakes of former governments that led to the exodus of copper miners to seemingly greener pastures in Chile are finally being forgotten as the province embraces its new identity as a producer in a world looking for a major supply replacement. Mid to long term plans are already being developed to fill the supply gap that is growing on the decline of Chile's biggest mines, and international confidence and a friendlier business environment points to BC to be the new epicentre.

Unlike the porphyry copper boom seen during the 1960s that was quashed in the early 1970s by a changing government, today's copper interest is looking to be long term. With declining forestry revenues taking their toll on the government's budget, one certainty going into the next upcoming cabinet shuffle will be the friendlier attitude toward mining and what it can bring to the province's economy. This bodes well for mining companies looking to develop their long term strategies, including that of recently listed Yellowhead Mining Inc. [YMI – TSX.V] whose enormous Harper Creek copper-gold-silver advanced exploration project already projected to be one Canada's largest copper projects, and is slated for a 25 year mine life beginning in 2014-2015.

Nestled within BC's mineral rich interior sits the Harper Creek property, 100% owned by Yellowhead. The area was originally discovered in the 1960s by Noranda and US Steel before changing political winds halted progress and the companies packed up their shovels. Today, Yellowhead benefits from their lost opportunity, boasting an NI 43-101 indicated resource of 569 million tonnes grading 0.32% copper and inferred resources of 62.7 million tonnes with grades of 0.33% copper, with contained 4.0 billion lbs and 0.5 billion lbs of copper respectively, when using a 0.2% copper cut-off.

Covering nearly 43k hectares and within an hour's drive of mining centre Kamloops and only five hours from corporate headquarters in Vancouver, Harper Creek is not only huge, but it's also accessible and within friendly territory. With tax incentives to help develop industry in the region, an open and mutually beneficial relationship with the local communities including First Nations, Yellowhead Chairman, Greg Hawkins, strongly believes he's circumvented the troubles seen abroad by landing a project in his company's home province. Many factors other than just straight assay results help to bolster the economics of mining in BC.

Despite what you may read, hear or whatever, about how grade is the answer to all evils, I can give you 3% copper, hundreds of millions of tonnes of it, open-pitable, but when I tell you where it is, you're going to say that you don't want to go there,” says Hawkins to those who question BC's potential. “The Democratic Republic of Congo. So I reiterate, it's not about the grade. It's about the costs and the risks of operating a mine. And those costs at Harper Creek are amongst the lowest of the industry globally.”

This project has fabulous infrastructure, and we are to-date very much a welcome addition in the neighbourhood. No one is contesting or protesting our presence or activities. There appear to be no fatal flaws in the project and the potential to go ahead. It's huge and it's underexplored, with the real potential to become a producing project within the next 3-4 years.”
Already this modern copper boom is being eyed by international interests with many of Yellowhead's comparables. Copper Mountain Mining Corporation [CUM – TSX] received a $250 million injection through a partnership with Mitsubishi Materials Corporation. Thompson Creek Minerals [TCM – TSX] bought Terrane Metals' Endako Mine at Mt Milligan for $650 million plus shares. Polish giant KGHM rallied behind Abacus Mining and Exploration [AME – TSX.V] and its Afton-Ajax project, which is also located near Kamloops.

“We are expecting when it comes time to build the project that it should have a lower capital cost than BC projects of similar scale (planned 70,000 tonnes/day) due to our infrastructure advantages.. We would certainly be looking to bring in some industrial partners,” says Yellowhead's Executive Vice President Ronald Handford. “We really haven't got any fixed ideas on who the ideal partner is yet. We expect strong interest from international smelters, mining and trading companies, as there are very few projects of this scale in politically stable jurisdictions available without partnerships in place.”

These strategic partnerships point to a very favourable market, and a beneficial bargaining chip for Yellowhead and its strategists. But, there's still work to do before Yellowhead expects the phones to ring. With a 2014-2015 target date to begin mining operations, there remains the time to fully explore the property. The Harper Creek Copper Project is one of the biggest copper projects in Canada, and the expansiveness is yet to be fully discovered.

"I don't see that there's much downside in copper between now and when we'll be bringing this project on,” adds Handford. "There's certainly some development projects in the pipeline internationally, but the bigger ones we think are going to be brought on later than our schedule forecasts. Even if we have a couple years of mid $3 copper this project is going to be great by our target start-up date of 2014.”

With the management team's multiple decades of experience in the area, Yellowhead has indicated that they are in this for the long haul, wanting to see their project become the mine they envisioned. As well, the local populace of nearly 6000 residents want to see the project come as well, with the hope of breathing new life in an economy flattened by closing forestry interests. The Yellowhead team is confident in its proposed mine's 25 year projections.

"Absolutely,” says Greg Hawkins, when asked if the projections are accurate. “It could take on more than a 25 year mine life. It's the biggest such sulphide system that I'm aware of. We've been asking for anybody to give us analogues in the business and nobody has yet.”

G. Joel Chury


DISCLOSURE: A fee has been paid for the production and distribution of this article and as such should be viewed in the context of an advertorial. At the time of publication, the author of the article does not currently hold any shares in the company described, but maintains the right to acquire shares six weeks after publication.

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