NorthIsle Copper & Gold (NCX) - Timing it Right?

Based in Vancouver, BC, NorthIsle Copper and Gold currently owns one of the most promising copper gold porphyry deposits in Canada located in northern Vancouver Island with access to pre-existing infrastructure in a mining-friendly community.

NorthIsle recently completed an updated PEA for its 100% owned North Island Project and is advancing towards a pre-feasibility study.

Matt Gordon caught up with Sam Lee, President & CEO of NorthIsle Copper and Gold for an update on the company.

Company Overview

The NorthIsle project has approximately a 22-year mine life of copper, gold, molybdenum, and rhenium. The distribution is about 62% copper, and 33% gold by revenue. It has about a $1.1Bn after-tax Net Present Value of 8%, out of almost 20% after-tax IRR. It is a big project with an average annual production of approximately 156Mlb of Copper equivalent over that life of mine. NorthIsle is managing the exploration programme across 50km strike length tenements which are adjacent to the project. These border the historical BHP Island Copper mine that produced for 24-years over the same products.

New Information, Smart Money, & Cap Layouts

NorthIsle believes that the sector is in a period of stagflation with high prices and low growth which is driven by covid that has created a risk-off attitude for the general investor. In this environment, riskier opportunities, such as the NorthIsle project, possibly do not get the attention that they deserve. NorthIsle aims to stay the course and advance their strategy approaching the perfect storm relating to a copper deficit.

The gold component of the project provides 100,000oz of recoverable gold for 22-years and this gold component alone addresses the entire $1Bn capital expenditure in the future. NorthIsle is currently only at the stage of the Preliminary Economic Study after which they can then move to the PFS before they will need to address this $1Bn capex. 

NorthIsle recently raised $10M combining 2 offerings. The next growth initiative and de-risking is the Pre-Feasibility Study which they will finance in individual stages and at these prices, they are not planning to over-dilute their shareholders. The company is focused on growth and is fully financed for the exploration stage of the project. The 10,000m drilling that the company is doing this year is all exploratory targeting new discoveries and expanding the current project. None of it is in-fill drilling.

Crediting the Market, Infiltrating, & Balanced Approach

NorthIsle has earmarked $1M of the $10M that was raised to go towards project development and critical path items. The First Nations partnership community is critical in British Columbia, Canada. NorthIsle believes that they are not only doing the right thing, but that the First Nations groups are their neighbours and NorthIsle has applied $1M to this development. The participation agreement is critical to ensure the development of the project moves into production within the next 10-years.

NorthIsle initiated the 2021 exploration programme in March starting with Pemberton Hills, then moving to Northwest Expo, Red Dog, and then Hushamu. All 3 have very distinct exploration characteristics. Pemberton Hills was the blue-sky, greenfield exploration programme that they focused on with Freeport, and triangulated on an area, put a couple of holes down and found that the system was much larger than they expected. The system is tilted, and the system is deeper. This is critical information as it relates to the overall strategy, which is that the current operation is defined by the PEA as a starter pit. This could potentially be a massive deposit and given all the geological characteristics, but it is at a very early stage at the moment. 

NorthIsle is currently drilling at the Red Dog Northwest Expo to test the down-dip extension of the orebody. At Northwest Expo, it’s to test the chargeability and there were 2 historical drill holes that hit 1g/t over 100m through what they believe is a porphyry. This is quite significant and NorthIsle is currently focusing on drilling that out, defining the trend, and seeing what the continuity is around it. The third part of the exploration programme is planned to start in a couple of weeks around Hushamu which is the much larger, more consistent, higher tonnage orebody that tilts to the southeast. The drilling continues down that trend and is stepping out to the southeast. 

The starter pit is around 75,000t per day which is a manageable size by an intermediate company and a strategic investor could be interested in the project and whether they have a social licence and good infrastructure. Port Hardy is only 30-minutes away from the project which is a 5,000-person city built by BHP Utah and grew in size because of that mine.  The community support is there and history is embedded in the community which provides tremendous support to the local mining industry. The First Nations group that worked and had a partnership with BHP, is the same First Nations group that NorthIsle are working with.

World-Class Projects, Copper Companies, & Retail Establishment

The NorthIsle copper concentrate is clean, high-purity, low-arsenic, low in deleterious elements, with a good 25% - 30% concentration of copper, and has gold too. This concentrate has been tried and tested through BHP’s Island Copper operation, which is effectively the same extension of the NorthIsle system. Companies like Sumitomo and the Japanese Mitsubishi, the traders and off-takers, need this type of quality concentrate so there are a lot of options around financing and reducing the cost of capital for this project.

NorthIsle is fully financed for this critical stage-gate that’s in front of them and is in a very strong position. The company has brought in some top quality people including Kevin O’Kane who spent 37-years at BHP and the past 2-years at Silver Standard as chief operating officer. O’Kane was the chief mining engineer for BHP at Island Copper. The team has good experience which is instrumental in the understanding of the NorthIsle project. 

NorthIsle also brought in Nick Van Dyk,as CFO who has a long history of investment banking. He has also been an executive for a company called Polaris that owns the Orca mine just south of the NorthIsle project which has the same First Nations group. The third hire was Michelle Tanguay who was the head of sustainability, community and environment for GT Gold. Tanguay has worked for Newmont and for Argonaut developing the Magino mine, and chose NorthIsle as her next opportunity, which is a huge endorsement. The fourth hire, their VPX, is Robin Tolbert who has extremely good global Gold porphyry experience working in Indonesia, Arizona and the Yukon. 

NorthIsle has been building the team to position themselves to execute their vision. A lot of focus has been on marketing to the institutional community, and they are starting to establish a retail presence too.

NorthIsle believes that the best time to finance a mine is at the top of the market and the best time to build a mine is at the bottom of the market. The best time to produce the mine is when the market is going up again.  NorthIsle aims to have a production decision and a finance decision 4-years from now, to be able to finance the $1Bn Capex in the best time in the cycle. The company aims to develop it in perhaps the best time in the cycle too because as the market weakens, the availability of labour, equipment etc gets cheaper and more available. The project will be a 2-year build, so they will hit that part of the cycle perfectly, and once they start producing, the cycle should go back up again.

To find out more, go to the NorthIsle Website