Prefeasibility Study

2017 PFS Summary

An excess of C$50 million of historical project expenditures provide the basis for the 2017 updated PFS. Updates to the study include parameter changes consistent with current market conditions, such as capital expenditures, operating costs, metal prices and foreign exchange rate.

Project Design

The Kutcho project is envisioned to be an underground mining operation, supplemented by a starter pit on the Main deposit during the construction phase, to extract ore from the Main and Esso deposits. Two underground mining methods are proposed: sublevel longhole stoping for areas where the dip is greater than 50°, and mechanized cut and fill with paste backfill in shallow dipping areas of less than 50°.

A 2,500 tpd process plant is assumed to operate 365 days per year at 92% availability, with mill feed to be crushed, ground and subsequently subjected to copper and zinc flotation. The tailings will be sent to a paste backfill plant to produce a cemented paste, half of which will be used for backfill while the other half will be sent to the surface tailings disposal. Copper and zinc concentrates will be thickened and dewatered before load-out, with precious metals reporting to the copper concentrate.

Production Statistics
Mine Life12 years
Production Rate2,500 tpd
Cu Recovery84.7%
Zn Recovery75.7%
LOM Cu Production378 Mlbs
LOM Zn Production473 Mlbs
Av. Annual Cu Production33 Mlbs
Av. Annual Zn Production42 Mlbs

Project Economics

The base case scenario below uses metal prices of US$2.75/lb copper, US$1.10/lb zinc, US$17.00/oz silver and US$1250/oz gold, and a forex rate of 0.75 US$:C$.

ItemUnitValue
Net Operating IncomeC$M1,088
Net Pre-tax Cash FlowC$M801
Average Annual Pre-tax Cash FlowC$M86
LOM Income TaxesC$M267
LOM Free Cash Flow (after-tax)C$M534
Average Annual Free Cash FlowC$M63
Pre-tax NPV (8% discount rate)C$M424
Pre-tax IRR%34.6
Pre-tax PaybackYears3.3
After-tax NPV (8% discount rate)C$M265
After-tax IRR%27.6
After-tax PaybackYears3.5

The Prefeasibility Study was conducted under the overall supervision of Gord Doerksen, P.Eng. of JDS Energy & Mining Inc. Mr. Doerksen is the VP Engineering at JDS and an independent qualified person under National Instrument 32-101 who has verified and approved the technical and scientific information related to the 2017 Prefeasibility Study, and prepared the economic analysis included on this website.

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