Only nine months after reaching commercial production at its high-grade Minto copper-gold mine, Sherwood Copper Corporation made a significant dent in its bank debt. The company said strong copper prices along with increased production and decreased operating costs allowed for the payment.

Second-quarter 2008 production totaled 12.8 million pounds of payable copper at an estimated total cash cost of C96 cents per pound of payable copper (after estimated by-product credits and offsite costs) versus 11 million pounds of payable copper at total cash cost of $1.04 per pound in the first quarter of 2008.

The copper miner also enjoyed a 21 percent reduction in per-metric-ton operating costs, from C$86/t in the first quarter to C$68/t in the second quarter. Sherwood expects a considerable reduction in operating costs once the mine is plugged into the power grid. Completion of the power line and related facilities is expected before year-end 2008.

Increased production, lower debt

These improved operating results were achieved as a result of mill throughput increasing by 35 percent from an average of 1,674 metric tons per day in the first quarter to 2,266 tpd in the second quarter. Production levels continue to rise at Minto, with June averaging 2,521 tpd.

Sherwood aims to average mill throughput in excess of 2,400 tpd for the balance of 2008 in order to achieve its production forecast of around 55 million pounds of payable copper and 24,000 ounces of payable gold for the year. 

The company anticipates continued production increases and in July received approval of permit amendments to allow production increases up to 3,200 tpd. In addition, $3.1 million has been allocated for improvements at Minto, including modifications and upgrades to improve mill performance during extreme cold temperatures and a new concentrate thickener to handle increased production.

"By grinding the ore coarser (which testing shows should not negatively affect recoveries) and spending less than $3 million in capital, we hope to be processing at a rate 28 percent higher than previously forecast throughout 2009, and beyond," Sherwood President and CEO Stephen Quin said.

Sherwood reported its subsidiary, Minto Explorations Ltd., repaid an additional $12 million of its project loan facility on top of a $5 million payment made in March, reducing the amount outstanding to $40.9 million. In addition, MintoEx placed $7.5 million into its banks' debt service reserve account to partially cover the next payment due Sept. 30.

Copper prices spur strategy change

In order to take advantage of high copper prices, Sherwood decided to develop the pit north of the current pit, as opposed to the prior plan of developing the southern portion of the pit first. This rescheduled mine plan will expose the largest amount of high-grade copper-gold ore (greater than 4 percent copper and 2 grams per ton gold) in the main Minto pit more than a year earlier than previously planned, resulting in increased copper production in 2009.

"Going forward, we continue to push down to much higher grades in the latter part of 2008, which should result in production targets being met in 2008 and in a significantly stronger 2009 than previously planned," Quinn said.

To get to this high-grade ore, the company suspended mining ore from the current pit and focused its efforts on stripping overburden off of the Phase 3 pit. The copper-gold rich ore should be exposed by the end of the third quarter and feeding the mill in the final quarter of 2008. During the second quarter, Sherwood fed the mill with material stockpiled over the past year. Phase 3 stripping costs were deferred, but previously deferred mining expenses related to the stockpiled ore were included in second-quarter cash costs.

At the end of the second-quarter the Minto Mine had produced 27,711 dry metric tons of concentrate with an average grade of about 40 percent copper. Three shipments totaling about 29,400 dt has been shipped from the Port of Skagway in Alaska to Asian smelters.

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Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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