Morrison Deposit
| Location: | Sudbury, Ontario, Canada |
| Ownership: | 100% |
| Type of Ore body: | Footwall |
| Primary Metal: | Copper |
| Secondary Metals: | Platinum, palladium, gold and nickel |
| Processing: | Custom processed |
| End Product | Ore sent to third party processor |
| Infrastructure | Accessible by road and rail |
| Employees | 194 |
Deposit Profile and Historical Development:
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The Morrison Deposit (formerly known as the "LFD") was discovered below the Levack Mine in 2005 by the FNX exploration team. The Morrison Deposit is a sharp walled, high grade copper-nickel-precious metal Footwall deposit, which occurs as multiple veins within a larger mineralized envelope. This mineralization envelope is currently open for expansion at depth, but currently measures 2,600 ft in the dip direction, varies from several hundred to 1,200 ft along strike and is from less than 100 ft to more than 300 ft wide. Within this mineralized envelope are trunk veins from 8 to 40ft wide, branch veins from 3 to 8 ft wide and tertiary veins measuring from less than a foot to 3 ft wide. The veins are massive sulphides containing chalcopyrite, pendlandite and millerite, typically grading from 20-30% copper, 1-5% nickel and from 5-40 grams per ton of platinum, palladium and gold. Given their irregular orientation and geometry, the LFD vein systems must be drilled at very close spacings to convert the mineralization into NI 43-101 compliant mineral reserves and resources.
The initial drilling of the Morrison Deposit in 2005 consisted of long, widely-spaced boreholes from surface in order to broadly define the mineralized envelope. By 2008, using access from Xstrata Nickel's adjacent Craig Mine, underground drill stations allowed detailed drilling of limited parts of the Morrison, which delineated mineral resources in a 250 ft vertical slice of the Morrison. As the 2650 Level access ramp is driven to depth to develop the Morrison, additional drill stations are being established and more resources are being defined.
Mining/Processing & Infrastructure:
The Morrison Deposit is located in the lower portion of the historical Levack Mine and the mine is currently accessed via the Levack #2 shaft which is connected to the Morrison Deposit via an internal ramp which extends from the 2650 Level to below the 4000 Level. Ore and waste are trucked up the ramp and brought to surface using a loading pocket at the 2650 Level.
During 2010 and 2011 Quadra FNX had been rehabilitating the bottom of the Levack # 2 shaft (from the 2900 to the 3600 Level) and developing a second decline on the 3600 Level which would have allowed for ore to be trucked across to the # 2 shaft and skipped to surface.
In October 2011 Quadra FNX announced that it had entered into an Access Arrangement with Xstrata Nickel which allows the Company to utilize the Craig mine shaft (located adjacent to the Morrison Deposit) and related underground infrastructure to further develop and operate the Levack mine, including the Morrison Deposit.
The key terms of the Access Arrangement:
• Quadra FNX gains access to the Craig shaft and mine infrastructure for the life of the Levack mine/Morrison Deposit
• Quadra FNX will operate the Craig shaft and underground infrastructure but will not undertake mining from Xstrata Nickel's Craig property. In the event Xstrata Nickel exercises its option to resume operational management of the Craig shaft, it will continue to provide access to Quadra FNX to hoist up to 450,000 tonnes per annum of material from the Levack mine/Morrison Deposit
• Quadra FNX will pay Xstrata Nickel:
. $10 million during the first year of operation
. $2 million per annum lease fee plus a sliding scale payment per tonne of ore hoisted via the Craig shaft
The key benefits of the Access Arrangement include:
• The expansion of hoisting and haulage capacity at the Morrison Deposit allowing the potential for higher throughput and production going forward
• Improved operating flexibility, underground infrastructure, ventilation and power distribution to the lower parts of the Morrison Deposit
• Accelerated underground access, development of definition drilling platforms and mine development in the lower portion of the Morrison Deposit
• Immediate cost savings related to the cessation of ongoing rehabilitation work on the existing Levack #2 shaft
• Significant improvement in drill access, which will facilitate mineral resource delineation (for future conversion to reserves) in the lower portion of the Morrison Deposit
• Development of alternative diamond drill platforms, which will be used to evaluate additional exploration targets proximal to the Morrison orebody
Current Activities and Outlook:
Q4 2011 is expected to be a strong quarter for production as mining starts on the second cut of higher grade sill horizons. The 2011 payable copper production is expected to be at the high end of the previously stated 30 to 40 million pounds guidance range. In addition, TPM production is expected to be between the 25,000 to 30,000 ounces range while payable nickel production is expected to total approximately 6 million pounds.
In October the Company and Xstrata Nickel signed a term sheet (the "Craig Access Arrangement") to utilize the Craig mine shaft and related underground infrastructure to further develop and operate the Levack Mine, including the Morrison Deposit. The arrangement is subject to the finalization of a definitive agreement that provides for these and other terms within 60 days.
The Company expects that the use of Xstrata Nickel's Craig infrastructure will significantly improve the operational flexibility of the Morrison deposit and provide additional mining and drill access in the lower portions of this high grade ore body. The additional development and improved efficiency is expected to have a positive impact on Morrison's long term production outlook.
As a result of the Craig Access Arrangement, the Company has ceased the development of the 3900 Level ramp and is focused on development to depth below 4200 Level. An implementation plan and preparation work has been initiated which will enable a seamless transition to Craig infrastructure in Q1 2012. Key priorities are establishing ore and waste haulage through the existing 4000 Level breakthrough to the Craig mine and up the Craig Shaft as well as development of an exploration drift platform to delineate reserves to depth.
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Reserves / Resources
The Mineral Reserve and Mineral Resource estimates are prepared in accordance with the CIM Definition Standards On Mineral Resources and Mineral Reserves, adopted by CIM Council on November 14, 2004, and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines, adopted by CIM Council on November 23, 2003, using geostatistical and/or classical methods, plus economic and mining parameters appropriate to each operation. Definitions and guidelines can be found at www.cim.org.
Morrison Reserves (as of December 31, 2010)
| Reserves | Ore (Mt) |
Cu Grade (%) |
Ni Grade (%) |
PGM Grade (g/t) |
Au Grade (g/t) |
Cu Grade (M lbs) |
Contained Ni (M lbs) |
Contained TPMs (M oz) |
|---|---|---|---|---|---|---|---|---|
| Proven | - | - | - | - | - | - | - | - |
| Probable | 0.9 | 8.28 | 1.61 | 6.1 | 0.8 | 166 | 32 | 0.20 |
| Total | 0.9 | 8.28 | 1.61 | 6.1 | 0.8 | 166 | 32 | 0.20 |
Morrison Resources (as of December 31, 2010)
| Footwall Resources |
Ore (Mt) |
Cu Grade (%) |
Ni Grade (%) |
PGM Grade (g/t) |
Au Grade (g/t) |
Cu Grade (M lbs) |
Contained Ni (M lbs) |
Contained TPMs (M oz) |
|---|---|---|---|---|---|---|---|---|
| Measured | - | - | - | - | - | - | - | - |
| Indicated | 0.7 | 13.24 | 2.74 | 9.28 | 1.08 | 196 | 41 | 0.40 |
| M&I | 0.7 | 13.24 | 2.74 | 9.28 | 1.08 | 196 | 41 | 0.40 |
| Inferred | - | - | - | - | - | - | - | - |
Mineral Resource are inclusive of Mineral Reserve.
TPM = Pt +Pd + Au
The Mineral Resource cut-off is based on the direct cost of mining and the Mineral Reserve cut-off is based on the direct cost, indirect cost, the sustaining capital costs and the impact of the Gold Wheaton agreement. The long term metal prices used were: Cu at US$2.50/lb, Ni at US$7.00/lb, Pt at US$1500/oz, Pd at US$400/oz and Au at US$1,000/oz with a Canadian dollar exchange rate at US$1.00. The Qualified Persons responsible for the 2010 Mineral Resource and Mineral Reserve estimates are Dave King, P.Geo., Manager Geoscience Data & Services; Stu Gibbins, P.Geo., Superintendent Geological Services and Mark Frayne, P.Eng., Manager Engineering, who are all Quadra FNX employees.