Monday, March 26, 2012

Canadian company plans exploration project for Keweenaw copper

During his presentation on the Keweenaw Copper project to members of the Keweenaw Peninsula Chamber of Commerce in February 2012, Ross Grunwald -- vice-president of exploration for Highland Resources, a Canadian company -- fields questions from the audience. Also pictured is Paul Lehto (seated, center), Calumet Township supervisor. (Photos by Allan Baker for Keweenaw Now)

By Michele Bourdieu

HOUGHTON -- Highland Resources, a Canadian company, recently launched a Web site devoted to their plans to explore historic Keweenaw copper deposits -- from Calumet to Copper Harbor -- in order to determine the mining potential of some former native copper mines and of some related sites on the Keweenaw Peninsula known to contain copper sulfide.

Even before the Web site was updated with this project, members of the Keweenaw Peninsula Chamber of Commerce attended a February meeting with a presentation on the project by Dr. Ross Grunwald, Highland Resources vice-president of exploration, who explored and mined copper at Centennial in the 1970s.

According to the Web site, "Highland entered into a joint venture agreement on August 4th, 2011, which will allow Highland to earn a 65 percent interest in the copper resources in Keweenaw and Houghton counties in Michigan. The Company has committed to spend $11,500,000 on a development and exploration program on the Property over a three-year period to earn the 65% interest."*

Much of the information on Highland Resources' site is taken from a technical report issued September 29, 2011, by Behre Dolbear Mineral Industry Advisors. The report, also available on the Highland Resources site, is titled "Canadian National Instrument 43-101 Technical Report on the Centennial and Kingston Native Copper, 543S, and other Copper Sulfide Properties, Houghton and Keweenaw Counties, Michigan, USA."**

Canadian National Instrument 43-101 (NI 43-101) is a rule developed by the Canadian Securities Administrators (CSA) and administered by the provincial securities commissions that govern how issuers disclose scientific and technical information about their mineral projects to the public. It covers oral statements as well as written documents and websites. It requires that all disclosure be based on advice by a "qualified person" and in some circumstances that the person be independent of the issuer and the property.***

Geologist Chuck Brumleve, who is familiar with the Behre Dolbear report, said NI 43-101 status "is a requirement of the Canadian Securities and Exchange if a company wants to sell investment to the public."

"It's just a disclosure for public consumption that this project is real -- that it's what it says it is," Brumleve explained.

The Sept. 29, 2011, Behre Dolbear report states, "Behre Dolbear was engaged by Highland Resources, Inc. (Highland Resources) to review the existing historic database and drill core for two historic mines, one undeveloped property, and several exploration projects and to complete a Property of Merit NI 43-101 Technical Report. Additionally, Behre Dolbear is to suggest, recommend and give advice on the technical issues of an exploration campaign designed to bring the historic native copper and exploration-stage copper sulfide occurrence resources to a standard compliant with Canadian National Instrument (NI) 43-101 guidelines."**

The Highland Resources Web site explains why none of the historic resources in the Keweenaw deposits are compliant with NI 43-101.****

As Brumleve noted, "It's all old data."

In order to make their data compliant with NI 43-101, Highland Resources will have to go back and re-drill most of the bore holes done in the past (when NI 43-101 didn't exist), and, in particular, re-do things like assays -- analyses of the rock -- Brumleve added.

The report also identifies Dr. Ross Grunwald of GeoResource Management, formerly resident geologist and later general manager of the Homestake Mining Company (HMC) and International Nickel Company (INCO) Joint Venture (HKV) at these properties in the 1970s, as Highland Resources' Vice-President of Exploration.

Videos: Ross Grunwald presents Keweenaw Copper project to Chamber of Commerce

Grunwald, who now works from an office in the Merchant and Miners Bank building in Calumet, recently spoke to the Keweenaw Peninsula Chamber of Commerce about his own background in Keweenaw mining exploration in the 1970s and about the potential of the properties destined for exploration in northern Houghton County and in Keweenaw County.

This photo, displayed in Ross Grunwald's presentation on the Highland Resources - Keweenaw Copper Co. plans for copper mining exploration in the Keweenaw, shows drill cores from Grunwald's previous work at the Centennial Mine in the 1970s -- still in storage in Calumet Township.

In this presentation, Grunwald identified the exploration company for the project as Keweenaw Copper Co., a U.S. subsidiary of Highland Resources. He stated this Keweenaw Copper project is for exploration and evaluation only, with no current plans to place any property into production. A decision on production would possibly be made two years from now, he added.

On the other hand, Grunwald indicated his objective "is to develop a resource that would be able to support a sustainable mining operation for decades rather than just five years, ten years or whatever."

Here is a video clip of Grunwald's introduction in his presentation to the Chamber during their "Eggs and Issues" breakfast meeting in early February of this year:



At a February breakfast meeting of the Keweenaw Peninsula Chamber of Commerce, Ross Grunwald, Vice-President of Exploration for Highland Resources (and its subsidiary Keweenaw Copper Co.) presents the company's project for exploration of historic mine sites and other properties with mining potential in the Keweenaw Peninsula. He also displays some graphs on worldwide copper production and consumption -- noting China's present increasing consumption of copper. (Video clips by Allan Baker for Keweenaw Now)

In his presentation Grunwald gave an overview of historic copper production in the Upper Peninsula and showed a map of the Upper Peninsula, identifying current and past mining projects:



Ross Grunwald continues his presentation to the Keweenaw Peninsula Chamber of Commerce, locating present and past mining projects in the Upper Peninsula, from the Copperwood Mine near the Porcupine Mountains State Park, now in the permitting process, to the Rio Tinto-Kennecott Mine near Big Bay, which began blasting a portal under Eagle Rock last September, to the Ropes Mine near Ishpeming -- a gold mine where Grunwald said he had worked in the 80s.*****

According to the Behre Dolbear report, the properties Highland Resources plans to explore -- more than 13,000 acres -- include two historic native copper mines: Centennial Mine, accessed by the Centennial #3 and #6 shafts, and the Kingston Mine, accessed by the Allouez #3 and Kingston shafts; the 543S copper sulfide (chalcocite) deposit near Gratiot Lake and other copper sulfide deposits to the north and east in Keweenaw County -- including the deposit called G-2 north of Bete Grise Bay. (See location map of sulfide deposits, Figure 7.13 in the report or click here on the Highland Resources Web site.)

This map, which Grunwald displayed in his presentation, shows the production area of native copper sites in northern Houghton and southern Keweenaw counties. The copper sulfide deposits are farther north and east in Keweenaw County.

"The most advanced copper sulfide project is the 543S deposit," the report states. "Several other copper sulfide deposits have been identified and partially drilled. The historic mines all produced native copper, while the 543S deposit and the other copper sulfide deposits contain chalcocite as the principal copper mineral. Small amounts of native silver occur at the Centennial, Kingston and 543S deposits."

Jack Parker, mining expert, says chalcocite is "much less likely to cause acid mine drainage" than pyrite.

"To make acid mine drainage, you need iron and sulfur and something else (like copper or nickel), Parker explains.

George Robinson, curator of Michigan Tech's Seaman Mineral Museum, notes that chalcocite is a copper sulfide and pyrite is iron sulfide. He said the pyrite, when it weathers and creates acid with water, will do more harm than chalcocite.

The report does mention that "pyrite has been reported as an alteration halo around some chalcocite bodies." (See the Behre Dolbear report, section 7.6.3.1 on the 543S sulfide deposit.)

Toward the end of his slide presentation, Grunwald attempted to assure his audience that environmental protection is part of Highland Resources' mission:



In this video clip, Ross Grunwald points out that "environmental stewardship" and "sustainability" are part of the Highland Resources mission.

In asking for community support of the exploration project, Grunwald noted in his slide presentation that the success of the operation "depends on application of state-of-the-art exploration techniques, community support (though not financial) and luck."

Question - Answer session

Grunwald then took questions from some of the Chamber of Commerce members present at this meeting:



Ross Grunwald fields questions on infrastructure, transport and economic viability from members of the Chamber of Commerce audience.

More questions:



Audience members ask Grunwald about refining or smelting copper ore at the White Pine facility, cost of fuel and truck vs. rail transport, and underground vs. open-pit mining.

In answer to some of the questions, Grunwald mentioned the White Pine smelter as a possibility for refining the ore, should the exploration result in mining activities. He said while open-pit mining can be more efficient, the narrow shape of the deposits would probably require underground mining. He also mentioned he hoped they would be able to return the tailings to the underground mine, since he had learned from his experience at the Centennial Mine in the 70s that leaving open stopes resulted in the stopes caving in, loss of 15 percent of the ore and safety issues.

Mineral, surface rights separated

Grunwald said the company has acquired mineral rights but would probably need to negotiate with landowners who still own surface rights. According to the Behre Dolbear report, "The mineral and surface rights are separated and held by various entities. The majority of the mineral rights at the Kingston and Centennial properties are believed to be held by BRP, with other minority owners; while the mineral rights at the 543S and G-2 chalcocite properties are solely held by BRP. Surface rights over most of the chalcocite deposits and occurrences are held by International Paper Company, while surface rights over the native copper properties are held by various individuals and lot owners." (See section 1.3 of report)

Gina Nicholas, a Keweenaw County resident, said she was somewhat familiar with the Behre Dolbear report and the properties Highland Resources hopes to explore for potential mining and lives in one area targeted by the report.

"My understanding is more exploration and research are needed before they can re-open or develop these mines," Nicholas said. "A lot has to come together before they can open a mine."

Nicholas noted the maps in the report are not very detailed and the report is a re-cap of exploration done in the past. New exploration and research would have to answer such questions as, "Does this exploration corroborate what we already know?" and "Is it economically feasible (to mine here again)?" How technology changes in the next three years could also be a factor in the feasibility, she added.

Nicholas serves on the board of directors of several organizations with land in Keweenaw County including the Houghton Keweenaw Conservation District, Gratiot Lake Conservancy and Keweenaw Community Forest Company, an organization that manages over 4,000 acres of working forest for others. Nicholas noted that she has begun to verify mineral rights for these properties as time permits and notes that the records for some properties go back as far as the 1840s.

Landowners wishing information on researching their mineral rights can contact Karen Maidlow, DNR (Department of Natural Resources) Property Analyst, Lansing , MI. Phone: 517-373-7677.

Company needs to notify DEQ if/when they decide to drill

Melanie Humphrey, geological technician in the Michigan Department of Environmental Quality (DEQ) Office of Oil, Gas and Minerals, said the company has contacted her and she has read the Behre Dolbear report. She said the company has not yet given her a specific time when they plan to begin exploratory drilling, but they would need to notify her if and when they decide to drill since she would need to know the location in order to know how the rules apply.

"The way the rules are written (Part 625) for (test well) drilling," Humphrey said, "if the first bedrock (they hit) is pre-cambrian they would not need a permit."

The Western UP is outside the Michigan Basin, Humphrey explained, so the bedrock is very old (pre-cambrian) and exempted from some of the rules in Part 625.******

"If they find an ore body they would definitely need a list of permits, depending what their activity is," Humphrey added.

So far she has no details on their plans, Humphrey told Keweenaw Now on March 26, 2012. Moreover, drilling information is proprietary information so it would have to be released by the company, she explained.

Notes:

* Click here to access the Highland Resources Web site.

** Click here to access the Behre Dolbear technical report on this project.

*** Click here for more on National Instrument 43-101.

**** See Historic Resources.

***** The Ropes gold mine was closed after a crown pillar cave-in occurred in December, 1987. See photos on pasty.com. In addition, mercury pollution from processing gold from the Ropes Mine played a role in a total ban on fish consumption in nearby Deer Lake. Read about the Ropes Mine in "Déjà vu at the old Humboldt Mill," by Gabriel Caplett.

****** Click here for Part 625 rules on Michigan's Mineral Well Operations.

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