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By Shane Lasley
Mining News 

South32, Trilogy finalize joint venture

Ambler Metals has cash, team to advance rich Alaska projects


Last updated 2/14/2020 at 4:56am

Copper zinc lead silver gold exploration drilling Arctic VMS deposit Alaska

Trilogy Metals Inc.

A drill turns at Arctic, a VMS deposit in the Ambler Mining District that is rich in copper, zinc, lead, gold and silver.

South32 Ltd. and Trilogy Metals Inc. Feb. 11 announced the finalization of a joint venture to advance exploration and development of the Upper Kobuk Mineral Projects in the Ambler Mining District of Northwest Alaska.

Australia-based South32 has contributed US$145 million to fund this new JV named Ambler Metals LLC and Canada-based Trilogy provided the 426,690-acre Upper Kobuk Mineral Projects (UKMP) to the new JV owned equally by the two companies.

The funds contributed by South32 will be used to advance the Arctic and Bornite projects, along with exploration across the Ambler Mining District.

"Having the support and partnership from a senior mining company like South32 – both in terms of their financial support and technical expertise – is tremendous for Trilogy Metals," James Gowans, interim president and CEO of Trilogy Metals, said in December. "We are very excited to advance this partnership."

The independently operated Ambler Metals will be controlled by a four-member board of directors with two representatives from each South32 and Trilogy.

Ambler Metals is expected to be based in Fairbanks, Alaska.

Arctic and Bornite

Arctic, the most advanced of the UKMP projects, hosts 43 million metric tons of probable reserves averaging 2.32 percent copper, 3.24 percent zinc, 0.57 percent lead, 0.49 grams per metric ton gold and 36 g/t silver.

A 2018 prefeasibility study detailed plans for an open-pit mine to extract the volcanogenic massive sulfide mineralization at Arctic and a 10,000-metric-ton-per-day mill that is expected to produce more than 159 million pounds of copper, 199 million lb of zinc, 33 million lb of lead, 30,600 ounces of gold and 3.3 million oz of silver annually over a 12-year mine-life.

A feasibility for Arctic is expected by mid-year.

Bornite, a large copper-cobalt deposit about 16 miles southwest of Arctic, is expected to be the second mine project in the pipeline for Ambler Metals.

At a cut-off grade of 0.5 percent, the open-pit portion of Bornite hosts 40.5 million metric tons of inferred resource averaging 1.02 percent (913 million pounds) copper; and 84.1 million metric tons of indicated resource averaging 0.95 percent (1.77 billion lb) copper.

At the same cut-off grade, the Bornite open-pit also hosts 124.6 million metric tons of inferred resource averaging 0.017 percent (45 million lb) cobalt.

The below-pit portion of Bornite, at a cut-off grade of 1.5 percent, hosts 57.8 million metric tons of inferred resource averaging 2.89 percent (3.68 billion lb) copper and 0.25 percent (32 million lb) cobalt.

A drill program carried out at Bornite last year included 10 holes (7,610 meters) of drilling that primarily focused on expanding and upgrading the underground resource. This drilling continued to expand and upgrade the already large copper-cobalt resource at Bornite.

The resources for both Arctic and Bornite are calculated to NI 43-101 standards, which is required for Canadian-listed mining companies. These resources are being recalculated to be Joint Ore Reserves Committee- (JORC) compliant, which is the standard for Australia-listed companies.

The new JORC-compliant resource is expected to be completed during the first quarter of 2020.

The Ambler Metals team

Trilogy's two seats on the Ambler Metals board of directors will be filled by James (Jim) Gowans and Kalidas Madhavpeddi.

Gowans, currently the interim president and CEO of Trilogy, has experience in Alaska, having worked for Cominco Limited where he oversaw the completion of a feasibility study and the subsequent design and construction of the world-class Red Dog zinc mine, which is about 172 miles northwest of Ambler Metals' Arctic deposit. Gowans went on to operate the Red Dog Mine for three years following its commissioning.

Prior to accepting the interim CEO role at Trilogy, Gowans was president and CEO of Arizona Mining Inc., which was bought by South32 for US$1.3 billion in 2018.

Madhavpeddi has an extensive career in the mining industry that spans more than three decades including 26 years at Phelps Dodge Corp., now Freeport McMoRan, where he rose to senior vice president. He is also the overseas CEO of China Molybdenum Co.

Earlier this month, Madhavpeddi was appointed as a director of Glencore, the world's fourth largest mining company by market capitalization.

South32's seats on the Amber Metals board are filled by Simon Collins and Pat Risner.

Collins, the Vancouver, British Columbia-based chief development officer of South32, brings more than 25 years of resources industry senior leadership and business development to Ambler Metals. Prior to his role in Vancouver, Collins was head of corporate development at South32 and spent 12 years in management and senior management positions at BHP, the largest mining company in the world by market capitalization.

Risner, currently the President of South32's Hermosa project in Southern Arizona, brings extensive mine operation experience to the Ambler Metals board, having worked in technical, planning and operational roles in both the United States and Australia. Risner came to South32 from BHP, where he held the position of group health, safety and environment officer. With strong leadership experience in mining health, safety, and environment, Risner is regarded as an industry expert in complex project planning and development.

To ensure a successful startup of the joint venture, management from Trilogy and South32 will take on interim roles.

Darryl Steane, South32's business development manager, will take on the duties as interim president of Ambler Metals; Elaine Sanders, Trilogy's CFO, will take on the duties as interim vice president finance; and Robert (Bob) Jacko, trilogy's senior vice president operations, will serve as Interim vice president operations.

Trilogy's technical team, which has been operating the UKMP, will be transitioning to Ambler Metals.

This team has been busy preparing programs to advance development and exploration of Arctic, Bornite and the wider Ambler district. Trilogy anticipates communicating more details, including the 2020 work programs and budgets, later this month.

Author Bio

Shane Lasley, Publisher

Over his more than 11 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.

Phone: (907) 726-1095


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