BMC embarks on a ‘once in a lifetime opportunity’

As BMC Minerals revels in the prospects of its Kudz Ze Kayah project, Alex Gluyas discusses what the Yukon site means for the company’s future with chief executive Scott Donaldson.

Unknown to most people outside of television show “Yukon Gold”, the Yukon Territory is synonymous with a backdrop of majestic mountain ranges and an abundance of alpine-fed lakes.

The region, which lies in the northwest of Canada bordering with Alaska, is as much aesthetically pleasing to tourists as it is enticing to mining companies, given the range of base and precious metal deposits that scatter its vast landscape.

Having just completed a feasibility study on its Kudz Ze Kayah (KZK) project in southeast Yukon, BMC Minerals has indicated a significant interest in the region.

Centred around the ABM deposit, BMC has reported encouraging results at the zinc-silver dominant polymetallic volcanogenic massive sulphide prospect.

The myriad of minerals on offer also includes  copper, lead and gold credits and the company’s chief executive officer Scott Donaldson says once operating, BMC “will be spoilt for choice in terms of metal focus.”

Indeed, the prospects are rousing given the feasibility study reinforces the pre-feasibility study BMC completed on the project in 2017.

It has confirmed a project with “compelling economics,” according to Donaldson, which includes a net present value after tax of $US527 million ($749.4 million), an internal  rate of return of 39.6 per cent after tax and a payback period of two years.

Geologists at work in the Kudz Ze Kayah camp core room.

 

The feasibility study outlines the development of a project with mining and processing occurring at an expected rate of two million tonnes per annum, with ore mined from both open pit and underground sources.

BMC has forecast annual production for the project at 235 million pounds (106,594 tonnes) of zinc, 32 million pounds copper and 56 million pounds lead. The feasibility study also estimates the mine will produce 7.8 million ounces of silver and 56,500 ounces of gold per annum

The ABM project is forecast to cost $US381 million ($542.6 million) to develop over a 20-month construction period, with an expected initial mine life of nine years once complete.

Underground development is anticipated to commence in production year three, while underground ore production is expected to start in production year five.

The processing plant design on the site will use conventional flotation technology to produce separate zinc, lead and copper concentrates, with the copper and lead concentrates expected to contain significant precious metal credits.

BMC has scheduled first concentrate sales in 2022, with concentrates to be transported via existing highways to the port of Stewart in British Columbia for export to market.

The products from the site are expected to be shipped to mineral-hungry markets around the globe, with Donaldson highlighting the south-east Asian market as a main focus, as well as the European smelter market.

“We are currently in discussions with buyers over concentrate sales agreements. There is a lot of interest as our concentrates  are high grade and contain such high levels of precious metals credits,” Donaldson says.

The markets are craving concentrate that will be made into metals serving a “good balance between old industrial applications and new technology uses.”

In terms of zinc prospects, Donaldson highlights its use to protect steel against corrosion, the most important market for the metal, representing 60 per cent of use worldwide.

The KZK exploration camp in Yukon, Canada.

 

The growth of copper in the electric vehicle revolution has made it the third most used metal in industry following iron and aluminium, which is also an exciting prospect for the KZK operations.

Silver’s growing demand for emerging battery technology also has BMC optimistic about the Yukon operations, according to Donaldson.

“The move to develop non-lead based batteries in more modern battery technology has seen the increase in industrial use of silver,” he says.

“There is also new zinc battery technology which shows great promise and of course today over half of all silver produced is used in industrial and emerging technologies chiefly solar energy and other alternative power sources.”

A key focus for BMC has been on community and environmental standards around the site, ensuring the effect on the surrounding habitat of sites is minimised. The company continues to work closely with Kaska Nation representatives and consultants to ensure that all parties are satisfied that the targeted project standards will be achieved.

BMC inherited an extensive body of baseline environmental studies that have been strengthened over the past four years. They have helped the company meet the rigorous Yukon Environment and Socio-economic Assessment Board (YESAB) process for submission of the project development proposal.

“Currently YESAB is preparing the draft screening report for the project. We expect to receive that before the end of the year. This will be available  for public and other comment and culminate in a final screening report and recommendations for the YESAB decision body in 2020,” Donaldson says.

The project proposal is supported by the collection of 22 years of baseline data, 17 years by the previous owners, Teck Resources, and five years by BMC.

BMC’s preparation of the project proposal has included consultation and engagement with Kaska First Nations, government, affected communities and businesses, and other stakeholders, according to Donaldson.

While the glacial weather conditions in northern Canada are hostile for those not accustomed to the area, for locals who will be working on site, Donaldson says it’s “business as usual.”

“Although it gets pretty cold up here for the Aussies, the Yukoners are very used to it and its business as usual in most weather conditions,” he says.

KZK landscape in Yukon.

 

“The Yukon Territory has a long history of exploration and mining dating right back to the Klondike gold rush days that everyone is familiar with. Yukoners are, therefore, familiar with and understand mining, this is a real positive.”

Donaldson also points out the stable geopolitical scene that, coupled with the mineral rich land, combines to make an exciting opportunity for BMC.

“The regulatory regime is well developed and easy to understand. Combine this with some of the world’s best geology for base metals and you can see why we want to be operating here.”

The opportunities aren’t confined to the ABM deposit either, as there is a firm belief by BMC that the Yukon district remains highly prospective in terms of the potential for future discovery.

Donaldson points towards the compelling drill targets that lie within three kilometres of ABM and the “promising” Fyre Lake copper/gold project to the south, which has resource estimates of more than 10 million tonnes.

Looking ahead, however, Donaldson turns to the Finlayson Lake District, which he says “remains highly prospective in terms of the potential for future discoveries.”

“We are currently planning additional work with the aim of building a mineral resource base that could significantly extend the life of the project,” he says.

BMC has steadily built off the back of a string of acquisitions around the KZK district, following up its 2015 acquisition of the project by purchasing Wolf in 2016, taking an option to purchase over Fyre Lake (Kona) in January 2017, and in March 2018 BMC purchased Tsa Da Glizsa expanding the Fyre Lake claims area.

Donaldson emphasises that “good projects are hard to find,” which explains the high level of commitment being applied to the KZK project.

“We believe that there is a growing significant supply and demand gap for many base and industrial metals due to a lack of successful new production assets being brought online,” he says.

“The KZK project, being a polymetallic deposit, predominantly zinc and silver with significant copper, lead and gold credits provides a natural hedge across the suite of metals.”

The potential for KZK and BMC’s wider Yukon prospects has Donaldson excited with the company “looking forward to developing a low cost, high margin project.”

This article also appears in the September edition of Australian Mining.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.