Little Deer Property (Copper)
Springdale Area, Newfoundland Location Map

Page Index:

Project Overview
Objective
Background
Brief History
Property Geology
Mineral Resources
Little Deer Copper Deposit
Whalesback Copper Mine
Preliminary Economic Assessment
Metallurgical Test Work
Project Infrastructure
2013 Program
QA/QC


Project Overview
Ownership Thundermin and 50% joint venture partner Cornerstone Resources Inc. own a 100% interest in the Little Deer and Whalesback copper deposits. Thundermin has the right to increase its interest in these deposits to 75% by completing a feasibility study and by arranging 100% of mine financing.
Operator Thundermin
Past Production Minor production by BRINEX 1970-72 from adjoining, past-producing, Whalesback mine; minor production by Green Bay Mining 1973-74 via ramp.
Deposit Type Cyprus type VMS deposit in ophiolitic mafic volcanic rocks
NI 43-101 Resource Little Deer: Indicated 1,911,000 t @ 2.37% Cu (99.8 M lbs Cu), Inferred 3,748,000 t @ 2.13% Cu (176.0 M lbs Cu).
Whalesback: Indicated 797,000 t @ 1.67% Cu (29.3 M lbs Cu), Inferred 443,000 t @ 1.57% Cu (15.3 M lbs Cu).
Process Normal flotation process produces a clean, high grade copper concentrate grading over 28% copper with over 97% copper recovery in locked cycle tests.
Mine Type Shaft/ramp - underground
Location 10 km north of Springdale, Newfoundland
Status P&E Mining Consultants Inc. completed a positive preliminary economic assessment on Little Deer on November 1, 2011 which demonstrates the potential technical and economic viability of developing a new copper mine at current metal prices. The additional mineral resources outlined at Whalesback are expected to enhance the overall economics of a mining operation at Little Deer. A diamond drilling program is planned for 2013 for Little Deer to commence upgrading the Inferred Resources to Indicated Resources so that a pre-feasibility study can be undertaken.
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Objective
Thundermin Resources Inc. (“Thundermin”) and Cornerstone Resources Inc. (“Cornerstone”) are exploring the Little Deer property to determine if there are sufficient quantities of economic grade copper mineralization on the property to support a viable mining operation. Exploration work completed to date on the Little Deer and Whalesback copper deposits has been successful in outlining a National Instrument 43-101 (“NI 43-101”) compliant indicated and inferred mineral resource of approximately seven million tonnes containing over 2.0% copper. A preliminary economic assessment (“PEA”) carried out on Little Deer in 2011 indicated that there is potential to develop Little Deer on an attractive economic basis at current copper prices. The mineral resources recently outlined at Whalesback, when combined with the resources previously outlined at Little Deer, are expected to enhance the overall economics of establishing a new mining operation at Little Deer. Whalesback remains open along strike to the east and west as well as down dip/plunge. Borehole Pulse EM surveys recently completed on Whalesback suggest that there is potential to expand resources with additional drilling. Little Deer is also open to depth and along strike and additional resource delineation will be carried out as well as in-fill drilling prior to carrying out a pre-feasibility study on the Little Deer/Whalesback copper resources.
 

 Hugh Harbinson & John Heslop with high grade copper core
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Background
The Little Deer copper property, which is located approximately 10 km north of Springdale in north-central Newfoundland, consists of 276 mineral claims (65.3 km²) in four separate mineral licences. Three of the licences (44 mineral claims) in the eastern part of the property (the Little Deer, Duck Pond and East Licences) were subject to an option agreement with Weyburn Investments Limited (“Weyburn”) whereunder Thundermin and Cornerstone have exercised their option to earn a 100% interest in the three licences. The remainder of the Little Deer property (Licence 12196M - 232 claims), which covers the past-producing Whalesback mine, the Timber Pond zinc prospect, the Mine Brook gold prospect and a 165 m wide sliver of property between the Duck Pond and Little Deer Licences, which covers part of the Little Deer copper deposit, is owned 50%/50% by Thundermin and Cornerstone.

The Little Deer Licence is subject to a 2.0% net smelter returns (“NSR”) royalty, 50% of which can be repurchased for $1,000,000. The Duck Pond Licence is subject to a 3.0% NSR royalty, with no buy-back provision. The East Licence is subject to a 1.5% NSR royalty, 50% of which can be repurchased for $1,000,000. Licence 12196M is subject to a 2.0% NSR, 25% of which can be repurchased for $1,000,000.

Thundermin, under its joint venture agreement with Cornerstone, has the right to increase its interest in the Little Deer property to 75% by completing a feasibility study and by arranging 100% of the necessary bank financing required to place the property into commercial production.
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Brief History
Copper mineralization was first discovered at Little Deer in 1952 by Falconbridge Nickel Mines Limited. The property was mined by British Newfoundland Exploration Company (“BRINEX”) from 1970 to 1972, with access via a 1,144 m drift on the 244 m level from the Whalesback mine to the north, and by Green Bay Mining Company from 1973 to 1974, with access via a 329 m decline. At the cessation of mining operations in 1974, historical reserves of 210,200 t grading 1.53% Cu were reported above the 245 m elevation (not NI 43-101) compliant).

Geological mapping, surface and borehole geophysical surveys and 6,815 m of diamond drilling in 12 holes were undertaken by Mutapa Gold Corp. (“Mutapa”) from 1998 to 2000. Mutapa intersected significant copper mineralization below and to the west of areas previously mined (3.8% Cu over a core length of 10.3 m in their westernmost hole). Mutapa returned the property to the owners in 2000 due to low copper prices and the desire to redirect their focus in the high-tech business.

Thundermin and Cornerstone acquired the Little Deer property from Weyburn in June 2007 and to March 31, 2013 have spent approximately $8,250,000 on the property with approximately $5,625,00 having been spent on diamond drilling. Exploration work includes over 50,000 m of diamond drilling in 82 holes, borehole Pulse EM surveys, assaying of core samples, lithogeochemical analysis on whole rock samples, a Differential GPS survey of all recent and historical drill holes to determine accurate collar locations and elevations, 227 line kms of VTEM airborne electromagnetic and magnetic surveys, NI 43-101 compliant mineral resource estimates for the Little Deer and Whalesback copper deposits, scoping level metallurgical test work on copper mineralization from Little Deer and the completion of a positive PEA for Little Deer.
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Property Geology
The Little Deer volcanogenic massive sulphide (“VMS”) copper deposit occurs within the Lush’s Bight Group which is a Cambro-Ordovician sequence of ophiolitic mafic volcanic rocks consisting mainly of intermediate to mafic pillow lavas with minor associated tuffs and agglomerates which have been intruded by gabbroic stocks and dykes. The main sulphide mineralization consists of disseminated, stringer and semi-massive to massive, pyrrhotite (pyrite), chalcopyrite and locally very minor sphalerite. The main copper-bearing zones strike east-northeast at 075˚and dip approximately 75˚- 80˚ to the south. There are eight similar VMS copper deposits in the Lush’s Bight Group with reported resources of which the Whalesback and the Gullbridge are the largest known to date at approximately 4.5 million tonnes (“Mt”) each. These deposits belong to what is commonly referred to as the “Cyprus type” of VMS copper deposit in that there are 17 such deposits with similar characteristics in Cyprus. 
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Mineral Resources
On June 22, 2011, an updated NI 43-101 compliant mineral resource estimate was announced for Little Deer. P&E Mining Consultants Inc. of Brampton, Ontario (“P&E”), estimated that Little Deer contains Indicated Resources of 1,911,000 t at an average grade of 2.37% Cu and additional Inferred Resources of 3,748,000 t at an average grade of 2.13% Cu (see Table 1).

On July 26, 2012, a NI 43-101 compliant mineral resource estimate was announced for Whalesback. P&E estimated that Whalesback contains Indicated Resources of 797,000 t at an average grade of 1.67% Cu and Inferred Resources of 443,000 t at an average grade of 1.57% Cu (see Table 1).

Table 1: Summary of Whalesback and Little Deer Mineral Resources at 1.0% Copper Cut-Off (P&E, July 9, 2012 (Whalesback) and June 20, 2011 (Little Deer))
Resource Classification/Zone Tonnes Cu% Cu lbs (M)
Indicated Mineral Resources      
Whalesback 797,000 1.67 29.3
Inferred Mineral Resources      
Whalesback 443,000 1.57 15.3
Indicated Mineral Resources      
Little Deer Zone 1,911,000 2.37 99.8
Inferred Mineral Resources      
Little Deer Zone 1,240,000 1.93 52.8
Little Deer Footwall Zone 1,711,000 2.04 77.0
Little Deer Footwall Zone Splay 797,000 2.64 46.2
Total Indicated Resources 2,708,000 2.16 129.1
Total Inferred Resources 4,191,000 2.07 191.3

Notes:
  1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  2. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.
  3. The mineral resources in this press release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
  4. Ordinary Kriging was used for Cu grade interpolation.
  5. Grade capping of 5% and 15% Cu, respectively, utilized on composites for Whalesback and Little Deer.
  6. A variable bulk density based on numerous field measurements was used for tonnage calculations.
  7. Domain models were generated from successive polylines spaced every five metres (Whalesback) and 10 metres (Little Deer) and oriented perpendicular to the trend of the mineralization. The outlines of the polylines were determined by selecting copper grades equal to or greater than 1.0% Cu with demonstrated continuity along strike and down dip.
  8. Whalesback: A copper price of US$3.82/lb (June 30, 2012 two year trailing average) and an exchange rate of US$0.99=C$1.00 was utilized to derive the 1% Cu cut-off grade. Mining costs were C$45/t, process costs were C$16/t and G&A was C$6/t. Concentrate freight and smelter treatment charges were C$10/t mined. Concentrate mass pull was 7%, process recovery was 97%, smelter payable was 96% and Cu refining was US$0.07/lb.
  9. Little Deer: A copper price of US$3.42/lb (May 31, 2011 24 two year trailing average) and an exchange rate of US$0.95=C$1.00 was utilized to derive the 1% Cu cut-off grade. Mining costs were C$40/t, process costs were C$15/t and G&A was C$5/t. Concentrate freight and smelter treatment charges were C$10/t mined. Concentrate mass pull was 7%, process recovery was 97%, smelter payable was 96% and Cu refining was US$0.07/lb.
  10. All Thundermin and Cornerstone assays were analyzed at Eastern Analytical Limited of Springdale Nfld. A QAQC program of field and lab duplicates, certified standards and blanks was put in place.
  11. The mineral resource estimate for Whalesback is based on diamond drill hole records from 316 surface and underground drill holes totalling 37,163 m of drilling. Fourteen of these holes were drilled recently by Thundermin and Cornerstone (see news releases dated October 20, 2011 and February 23 and May 10, 2012) and the remainder were drilled by British Newfoundland Exploration Company between 1961 and 1970.
The Little Deer and Whalesback mineral resource estimates were prepared under the supervision of Mr. Eugene J. Puritch, P. Eng., President of P&E. Mr. Puritch is an independent Qualified Person (“Q.P.”) in accordance with NI 43-101.

Mr. Andrew Hussey, P.Geo., Project Geologist and Lands Manager, Cornerstone Resources Inc., is the Q.P. that supervised the drilling programs on the Little Deer property for the purposes of NI 43-101.
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Little Deer Copper Deposit

Location Map
Vertical Longitudinal Section
Little Deer Copper Deposit
(Looking NNW)
Location Map
Little Deer - Whalesback
Copper Deposits
3D View Looking West
Location Map
Orthographic View of
Little Deer and Whalesback
Copper Deposits (Looking 330°)
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Whalesback Copper Mine
On October 20, 2011, Thundermin and Cornerstone announced encouraging new “blue sky” potential for the adjoining, past-producing, 100%-owned Whalesback Copper Mine (Figure 1). A digital compilation of data from 107 holes drilled in the mineralized zone below and to the west of the areas previously mined suggest that there is excellent potential for establishing additional copper resources on the Whalesback property (see Figure 2 and Table 2). 

Location Map Location Map Location Map
Whalesback Copper Mine
2011-2012 Drilling/Borehole
Pulse EM Program

Table 2: Significant Historical Intersections: Whalesback Copper Mine
Hole No. From (m) To (m) Width (m)* Cu (%)
9-43 -- -- 6.10 4.50
9-43 -- -- 3.35 4.01
8-28 119.79  125.27 5.48 3.23
9-90 39.93 44.2 4.27 2.96
9-88 36.58 44.96 8.38 2.88
9-47 160.02 166.12 6.10 2.90
9-85 41.15 45.70 4.57 2.55
9-52 73.15 80.01 5.33 2.51
9-78 51.82 60.96 9.14 2.44
WB-61-45 201.47 207.26 5.79 2.23
WB-65-99 65.53 68.58 3.05 2.25
9-38 21.03 24.38 3.35 2.29
9-92 27.43 35.97 8.54  2.20
9-79 68.58 81.69 13.11 2.13
11-3 67.36 75.90 8.54 1.99
Notes:
*Widths approach true thickness
--- Data taken from historical longitudinal section and no drill log available

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Preliminary Economic Assessment
On November 1, 2011, Thundermin and Cornerstone announced a positive Preliminary Economic Assessment (“PEA”) for Little Deer.

PEA Highlights
Base Case Scenario: (copper price of US$3.75/lb and an exchange rate of US$0.95 = C$1.00; all dollar amounts are expressed in Canadian dollars unless otherwise stated)
  • Mineral Resources: Indicated Resources of 1,911,000 t grading 2.37% Cu (99.8 million lbs of copper) and Inferred Resources of 3,748,000 t grading 2.13% Cu (175.9 million lbs of copper) and 20% mining dilution at zero grade with 90% extraction rate incorporated into the mine plan
  • Mining: 1,800 t/day underground mine with ramp and shaft access using long hole stoping method
  • Mine Life: 9.5 years
  • Conventional milling and flotation process with 97% copper recovery to a clean 28% copper concentrate
  • Initial Capital Cost: $110 million
  • Average Site Operating Cost: $47.32 per tonne of ore mined and milled ($1.16 per lb. of copper)
  • Total Revenue: $829 million
  • Pre-tax Net Cash Flow: $237 million: After-tax Net Cash Flow $166 million
  • Pre-tax Net Present Value at 6% Discount Rate: $130.4 million. After-tax Net Present Value at 6% Discount Rate: $86.7 million
  • Payback of Pre-production Capital: 3.5 years
  • Internal Rate of Return Pre-tax: 26.0%
  • Internal Rate of Return After-tax: 21.5%
Financial Evaluations
Financial evaluations for Little Deer were calculated by P&E using a discounted cash flow analysis. On a 100% equity financing basis, the Base Case analysis shows that the pre-tax Internal Rate of Return (“IRR”) is 26.0% and the Net Present Value (“NPV”), at a 6.0% discount rate, is $130.4 million. The pre-tax undiscounted cash flow for the project is $237 million and the payback of capital from the commencement of commercial production is approximately 3.5 years. The Base Case analysis shows that the after-tax IRR is 21.5% and the NPV, at a 6% discount rate, is $86.7 million. The after-tax uncounted cash flow for the project is $166 million. The Base Case scenario assumes initial capital costs of $110 million to advance the project to commercial production. The average operating costs for life-of-mine is estimated to be $47.32 per tonne of ore mined and milled. A projected 10-year average copper price of US$3.75 and exchange rate of US$0.95=C$1.00 was used in the Base Case financial analysis. The Base Case also includes the payment of certain underlying NSR royalties to third parties. The sensitivity of the project to copper prices is shown in Table 1.

Table 3: Sensitivity of the Little Deer Copper Deposit to Copper Price
Copper Price (US$/lb) 3.25 3.50 3.75 (Base Case) 4.00 4.25
Pre-tax IRR (%) 13.8 20.1 26.0 31.8 37.5
After-tax IRR (%) 11.1 16.3 21.5 26.6 31.7
Pre-tax NPV ($million @ 6%)     47.6 89.0 130.4 171.8 213.1
After-tax NPV ($million @ 6%)     27.4 57.1 86.7 116.3 146.0

Production Plan

The PEA was undertaken using a production rate of 1,800 t/day (657,000 t/year), resulting in a 9.5 year mine life for the project. Underground access will be gained via a ramp, driven at 15%, and an 875 m production shaft. It is envisioned that production from approximately the upper 400 m of Little Deer will be via ramp and production from the lower part of Little Deer will be via the production shaft. Copper mineralization from Little Deer will be extracted using a long-hole mining method using mechanized trackless mining equipment (see Figure 3).

Location Map

Copper mineralization from Little Deer will be processed in a new, state-of-the-art, environmentally friendly mill employing differential flotation to produce a high quality copper concentrate.

Approximately 46% of the tailings from the mill will be placed underground in cemented hydraulic backfill. The remainder of the tailings are expected to be submerged in the former Whalesback tailings impoundment facility which is located approximately 1.2 km north of Little Deer.

Approximately 389,000 t of copper concentrate will be produced during the life of the mine which equates to approximately 26 million lbs of copper on an annual basis. The concentrates are expected to be trucked to one of two deep water port sites within 25 km of the property for storage and loading onto oceangoing vessels for shipment to a custom smelter.

Capital and Operating Costs
The total initial capital cost to advance the project to commercial production is $110 million. This capital includes all new hoist, head frame, equipment, mill infrastructure, ramp, upper portion of the shaft and power line and transformers. It is anticipated that the mine/mill infrastructure will require approximately 16-18 months to complete from the date that all necessary permits are received and financing for the project has been completed.

The average life-of-mine operating cost per tonne of ore mined and milled is estimated at $47.32 which equates to approximately $1.16 per lb. of copper. 

In the PEA, P&E has identified a number of opportunities to potentially further enhance the economics of the project. These include the discovery of additional resources with further drilling at depth and along strike at Little Deer, the discovery of additional resources at the adjoining Whalesback Mine, improvement in metallurgical recoveries and concentrate grade, increase in mine production rates, further reductions in capital costs through the employment of refurbished equipment, project design optimization and the potential use of existing underground infrastructure, including vent raises, ramp access and pre-developed ore which exist on the Little Deer property.
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Metallurgical Test Work
On October 19, 2010, excellent metallurgical results from scoping level test work on core samples from Little Deer were announced. This work, which was undertaken at SGS Lakefield Research Limited (“Lakefield”) of Lakefield, Ontario, indicates that a clean, high grade copper concentrate grading over 28% copper with over 97% recovery and free of any deleterious elements can be produced from Little Deer. The use of a simple rougher-cleaner flowsheet, a common xanthate collector, pH control with lime and a relatively course primary grind for copper liberation from mineralization of medium hardness suggest that the operating costs should fall into the low range for any metallurgical plant constructed to treat the Little Deer mineralization (see Highlights).

Lakefield undertook a scoping level metallurgical test program on a representative sample of copper mineralization from Little Deer grading 2.43% copper, 0.034% cobalt, 0.03 g/t Au, 19.1% iron and 5.99% sulphur accompanied by basic environmental characterization of the flotation tailings produced from the metallurgical test program.

Highlights
  • Production of a saleable, high grade copper concentrate grading over 28% copper with over 97% copper recovery in locked cycle tests
  • Copper concentrates free of any deleterious elements
  • Copper recovered employing a simple rougher-cleaner flowsheet using a common xanthate collector
  • Copper mineralization of medium hardness with Bond ball mill work index of 14.6 kilowatt hours per tonne (“kWh/t”)
  • Fresh and aged tailings decant solutions well within Canadian Metal Mining Effluent Regulations (“MMER”) limits and non-lethal designations for MMER aquatic toxicology tests
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Project Infrastructure
LONGITUDINAL VIEW LITTLE DEER BLOCK MODEL (NNW)Little Deer and Whalesback are located on a brownfield site and are well situated to take advantage of Newfoundland’s developed infrastructure. The deposit lie approximately 16 km from the Tran-Canada Highway and are easily accessed by a 10 km network of paved and gravel roads north of Springdale, where there is an available skilled mining workforce. The site is approximately 8 km from a major power substation and there is a plentiful supply of fresh water in the area. The former tailings impoundment facility for the Whalesback Mine, which may be able to be upgraded and used to store additional tailings, is located only 1.2 km north of Little Deer. There is also good access to several deep water ports for any future shipment of copper concentrates.

The recovery of a substantial quantity of archived data, referenced earlier in this report, has also given Thundermin and Cornerstone a better understanding of the underground infrastructure that exists on the property. This infrastructure dates from 1966 to 1972 and 1972 to 1974 when a portion of the upper part of Little Deer was developed and mined by BRINEX and Green Bay Mining Company (“Green Bay”), respectively. BRINEX accessed Little Deer from the adjoining Whalesback Mine and Green Bay accessed Little Deer via a ramp. Three ventilation raises and substantial lateral development in unmined copper mineralization are known to exist on the property. This existing infrastructure may potentially afford substantial cost savings for access underground for future definition drilling and mining.
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2013 ProgramDrill
As a result of the positive PEA and the discovery of additional resources at Whalesback, Thundermin and Cornerstone intend to proceed with further evaluation of the Little Deer Project. This work will include an initial infill diamond drill program to commence upgrading existing resources from the Inferred to the Indicated Resource category prior to commencing a pre-feasibility study on the project.

The Little Deer and adjacent Whalesback deposits provide an excellent opportunity to re-establish the Springdale area of north-central Newfoundland as a significant copper producer. The general area has proven to be very prospective for volcanogenic massive sulphide deposits of the Cyprus type and the LDJV anticipates increased exploration activity on its large landholdings that may lead to additional discoveries.
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QA/QC
The PEA was prepared under the supervision of Mr. Eugene J. Puritch, P. Eng., President of P&E. Mr. Puritch is an independent Q.P. in accordance with NI 43-101 and has reviewed and approved the contents of this information. A NI 43-101 compliant PEA Technical Report was filed on SEDAR by Thundermin and Cornerstone on December 15, 2011.

Mr. Andrew Hussey, P.Geo., Project Geologist and Lands Manager, Cornerstone Resources Inc. and Q.P. has also reviewed and approved the contents of this information.
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Resource Estimate
(Whalesback)

Technical Report and Preliminary Economic Assessment

Technical Report and Resource Estimate
Update on the Little Deer Copper Deposit, Newfoundland, Canada, August 5, 2011

Consent Letter Ewert
Consent Letter Puritch

Consent Letters for the August 5, 2011 Technical Report and Resource Estimate

Metallurgical Test Work
An Investigation Into
The Recovery of Copper
From The Little Deer Deposit