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Project Summary


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The Minto Mine is a high grade copper-gold mine that commenced commercial production on October 1, 2007. It is located 240km north of Whitehorse, and is owned 100% by Minto Explorations Ltd., a wholly owned subsidiary of Sherwood Copper Corporation. The Minto Mine is an open pit operation with conventional crushing, grinding, and flotation to produce copper concentrates with significant gold and silver credits. Concentrates are exported via the Port of Skagway, Alaska, to smelters in Asia for treatment and sale. In December 2007 the results of an independent pre-feasibility study for the expansion of the Minto copper-gold mine were released. This study increased reserves and laid out a path for significantly increased copper production, commencing immediately, while materially enhancing project economics. In addition, significant exploration potential exists on the Minto property and aggressive exploration programs conducted by Sherwood have met with considerable success.

Sherwood acquired Minto Explorations and all other project interests, including a partially constructed but dormant mine, in June 2005. Within two years from acquisition, Sherwood re-drilled the resources to reserve standards, completed a bankable feasibility study, arranged project financing, built a new mine and reached commercial production.

Click here for Feasibility Highlights

Overview


Project Overview
2007 Operating Results
Production
Resource and Reserve Estimates
Resource Expansion
Processing
Metallurgical Information
Price Protection/Hedging
Area 2 Pre-feasibility Study
Project Opportunities
Permitting
Exploration
Resource Disclosure
2005-2007 Drill Results


Area 2 Pre-feasibility Study
December 2007 (8.9 MB)


Project Overview

The Minto Mine is an operating high-grade, open pit copper-gold mine located in the Whitehorse Mining Division, Yukon Territory, about 240km northwest of the city of Whitehorse. Sherwood Copper Corporation, through its subsidiary, Minto Explorations Ltd., has a 100% interest in the Minto Mine.

Access to Minto is via the Klondike highway to Minto Landing, where boat, barge or ice-bridge gives access across the Yukon River to the head of an all-weather, production standard gravel road constructed to the site.

Project highlights include:
  • First concentrates produced in May 2007, less than 2 years from project acquisition
  • Commercial production declared on October 1, 2007
  • First copper-gold concentrates shipped from the Port of Skagway bound for smelters in Asia on October 25, 2007
  • Operating results for 2007 included production of 9.66 million pounds of copper in concentrate including 5.35 million pounds of copper in the fourth quarter
  • Phase 3 Pre-feasibility Study ("PFS") demonstrates robust project economics at increased production levels:
    • Annual production is forecast to average 50-60 million pounds of copper, 20-25,000 ounces of gold and 250-300,000 ounces of silver during its first several years of operation.
    • Approximately 371 million pounds of copper and 154,000 ounces of gold to be produced in concentrates over 8 year mine life
    • On-site operating costs (after by-product credits) forecast at US$0.81/lb copper
    • Project reserves of 9.5 million tonnes at 1.90% copper and 0.69 g/t gold*
    • NPV of C$177 million (7.5% discount rate)
    • IRR of 41%
  • Forward sales of copper, gold and silver completed, securing significant revenue
    • Approximately 50% of first 4 years production sold forward
    • Forward sales represent less than 20% of Sherwood's 2006 in-situ resource
  • Off-take agreement with attractive terms for the sale of concentrates
  • Substantial Exploration Upside
    • Drilling, geophysics and geology have identified more than a dozen high priority exploration targets
    • Four new discoveries of high grade copper-gold mineralization made during the 2007 exploration program
  • Signed a Power Purchase Agreement with Yukon Energy for the provision of grid power to the Minto Project by the end of 2008
  • Signed agreement with AIDEA (Alaska Industrial Development & Export Agency) to develop and utilize the port of Skagway for the export of Sherwood's copper-gold concentrates (underway)



  • 2007 Operating Results

    Key operating statistics for the Minto Mine in the third and fourth quarters of 2007, and for the entire year (including waste stripping for the entire 12 months and limited concentrate production in the second quarter of 2007), are presented below. All costs and production prior to October 1, 2007 were capitalized, and commercial operations commenced on October 1, 2007.

    Q3/2007 Q4/2007 Total 2007*
    Tonnes mined 2,836,571 2,299,882 14,919,032
    - Ore 495,870 131,162 700,398
    - Waste* 2,340,701 2,168,720 ***14,218,634
    Ore grade
    - Copper (%) 1.69% 2.02% 1.70%
    - Gold (g/t) 0.45 0.61 0.45
    - Silver (g/t) 7.0 7.6 6.8
    Mill throughput
    - Tonnes processed 117,382 100,811 238,446
    - Copper grade (%) 1.90% 2.57% 2.16%
    - Gold grade (g/t)** N/A N/A N/A
    - Silver grade (g/t) 6.9 9.1 7.7
    Recoveries
    - Copper 78.1% 93.7% 85.1%
    - Gold* N/A N/A N/A
    - Silver 68.6% 87.7% 77.5%
    Concentrate
    - Tonnes produced (dmt) 4,965 7,086 12,630
    - Copper grade (%) 35.1% 34.3% 34.7%
    - Gold grade (g/t)** N/A N/A N/A
    - Silver grade (g/t) 112.4 113.8 113.0
    Contained Metal
    - Copper (lbs) 3,837,143 5,350,602 9,662,003
    - Gold (oz)** N/A N/A N/A
    - Silver (oz) 17,940 25,932 45,890
    * From June -- December 2007 inclusive, except the mining quantities are inclusive of all pit production through the end of 2007
    ** Gold is not assayed on site, resulting in a significant lag in receiving this data.
    *** Includes capitalized pre-stripping treated as pre-production costs in the DFS.


    This production level is less than set out in the 2006 detailed feasibility study but in line with revised forecasts set out in the 2007 pre-feasibility study as a result of decisions to (1) process lower grades during the commissioning and ramp up of the mill in order to avoid unnecessary metal losses until recoveries reached design levels and, (2) to construct the Phase 2 mill expansion earlier than contemplated in the detailed feasibility study, resulting in some production being deferred into 2008 as the plant expansion was constructed and tied in.



    Production

    The Main/Area 2 combined mine plan focuses on accessing and milling the high-grade ore first, with lower grade material sent to stockpiles for blending and processing later in the mine life. The following table sets out the copper, gold and silver in concentrates and estimated payable metal detailed in the December 2007 Pre-feasibility study.

    Pre-feasibility Study Production Schedule*

    Year

    Item Unit 2007 2008 2009 2010 2011
    Mill Feed tonnes ('000) 276 904 1,307 1,278 1,278
    Copper millhead grade % Cu 2.03% 3.11% 1.98% 3.10% 1.66%
    Gold millhead grade g/t Au 0.50 1.19 0.63 1.14 0.69
    Silver millhead grade g/t Ag 7.6 12.7 8.1 13.4 6.9
    Copper recovery to cons % 85% 96% 94% 97% 94%
    Gold recovery to cons % 55% 74% 74% 78% 77%
    Silver recovery cons % 85% 91% 94% 95% 86%
    Copper in cons lb ('000) 10,421 59,428 53,679 84,664 44,050
    Gold in cons oz Au ('000) 2.4 25.5 19.6 36.7 21.8
    Silver in cons oz Ag ('000) 57.5 336.8 317.9 523.5 241.1
    Concentrate Grade % Cu 33% 35% 43% 43% 41%
    Payable copper lb ('000) 9,974 57,155 51,778 81,666 42,491
    Payable gold oz Au ('000) 2.29 24.5 18.7 35.5 21.1
    Payable silver oz Ag ('000) 43.55 262.1 262.4 436.1 195.5

    Year

    Item Unit 2012 2013 2014 2015 Total/Ave.
    Mill Feed tonnes ('000) 1,281 1,278 1,278 577 9,455
    Copper millhead grade % Cu 1.79% 0.95% 1.53% 0.80% 1.90%
    Gold millhead grade g/t Au 0.76 0.29 0.59 0.23 0.70
    Silver millhead grade g/t Ag 6.8 3.5 4.9 2.8 7.5
    Copper recovery to cons % 92% 91% 91% 91% 94%
    Gold recovery to cons % 66% 75% 64% 64% 72%
    Silver recovery cons % 82% 85% 81% 81% 89%
    Copper in cons lb ('000) 46,161 24,363 39,222 9,280 371,268
    Gold in cons oz Au ('000) 20.7 9.0 15.5 2.7 154
    Silver in cons oz Ag ('000) 230.1 121.7 164.6 42.3 2,035
    Concentrate Grade % Cu 41% 43% 41% 41% 41%
    Payable copper lb ('000) 44,527 23,501 37,833 8,951 357,877
    Payable gold oz Au ('000) 20.0 8.7 15.0 2.6 148
    Payable silver oz Ag ('000) 180.7 96.4 122.4 32.3 1,631

    *Subject to permit amendments

    Additional work has been undertaken post completion of the pre-feasibility study to smooth out the production schedule and further optimize metal production. A further iteration of the mine plan is currently being reviewed, with the objective of moving some of the exceptionally high grade production in 2010 forward into late 2008 and 2009. Open-pit optimization will be an on-going process as additional information is incorporated from 2007 drilling and subsequent activities. In addition, Sherwood may include the installation of a gravity gold recovery plant in the grinding circuit in order to recover any free gold that may be present, however no benefit from this optimization has been assumed in the production forecast since the benefits of this will have to be demonstrated through production.



    Resource and Reserve Estimates

    Mineral Resources (0.5% Copper cut-off and inclusive of reserve)*:

    Class Tonnes In situ Grade Contained Metal
    (%Cu) (g/t Au) (g/t Ag) Cu (Mlb) Au (oz) Ag (oz)
    Minto Main (Zones 2,4,5,8)*
    Measured 7,060,000 1.98 0.71 8.07 309 160,000 1,832,000
    Indicated 2,000,000 1.06 0.31 4.72 47 19,700 304,000
    M+I 9,060,000 1.78 0.62 7.33 356 180,600 2,135,000
    Inferred 90,400 0.81 0.21 3.81 2 600 11,000
    Area 2
    Measured 3,578,000 1.56 0.62 5.48 123 71,000 630,000
    Indicated 4,018,000 0.99 0.36 3.26 88 47,000 421,000
    M+I 7,596,000 1.26 0.48 4.3 211 117,000 1,050,000
    Inferred 1,381,000 1.01 0.33 1.93 31 15,000 86,000
    Total Minto
    Measured 10,638,000 1.84 0.68 7.20 432 231,000 2,462,000
    Indicated 6,018,000 1.01 0.34 3.75 135 66,700 725,000
    M+I 16,656,000 1.54 0.56 5.95 567 297,600 3,185,000
    Inferred 1,471,400 1.00 0.32 2.05 33 15,600 97,000


    Mineral Reserves (0.62% Copper cut-off)*:

    Class Tonnes In situ Grade Contained Metal
    (%Cu) (g/t
    Au)
    (g/t
    Ag)
    Cu
    (Mlb)
    Au
    (oz)
    Ag
    (oz)
    Main Pit
    Proven 5,749,000 2.15 0.75 8.82 272.5 138,600 1,630,000
    Probable 350,000 1.22 0.50 5.98 9.4 5,600 67,000
    Total 6,099,000 2.10 0.74 8.66 281.9 144,300 1,698,000
    Area 2
    Proven 2,803,000 1.60 0.65 5.71 98.9 58,600 515,000
    Probable 552,000 1.22 0.44 4.48 14.8 7,800 80,000
    Total 3,355,000 1.54 0.62 5.51 113.7 66,400 594,000
    Total
    Proven 8,552,000 1.97 0.72 7.80 371.4 197,200 2,145,000
    Probable 902,000 1.22 0.46 5.06 24.3 13,400 147,000
    Total 9,454,000 1.90 0.69 7.54 395.6 210,600 2,292,000


    *Click here for resource disclosure.



    Resource Expansion

    In 2006, Sherwood geologists identified a possible extension to the main deposit, 130m south of the pit currently under development. An aggressive drill program in 2006 resulted in the discovery and definition of a significant new resource called Area 2. Within 20 months from discovery, Area 2 was converted into a reserve that supports a 45% increase in mill throughput and a 43% increase in total project copper and gold production. During 2007, significant new copper-gold mineralization was discovered at Area 118, Ridgetop, Gap, Copper Keel S. and Airstrip SW. Each of these areas has the potential to provide additional near surface resources beyond those considered in the December 2007 pre-feasibility study. Mineral resource estimates incorporating the results of the 2007 drilling are underway. Resource additions could potentially support additional production expansions or an increased mine life.



    Processing

    The process facility built at Minto utilizes a conventional circuit comprised of a crusher, SAG and ball mill for grinding, and flotation to produce concentrates that are filtered and stockpiled in a storage facility for later shipping to the port of Skagway, Alaska, for export overseas. A filtered tailings system is being used to mitigate reclamation costs by allowing dry stacking of tailings.

    The Minto concentrator initiated production ahead of schedule in May 2007 with a design daily production rate of 1,563 tonnes per day. A Phase 2 mill expansion was completed in mid-December 2007, six months ahead of schedule, increasing throughput to 2,400 tonnes per day. Commissioning was completed in February 2008 and ramp up to full Phase 2 production capacity is underway. This should result in significant copper-gold production in 2008 and beyond.

    A Pre-feasibility Study (completed in December 2007) incorporated the economic potential of the Area 2 deposit and laid out the basis for a Phase 3 mill expansion to 3,500 tonnes per day. The throughput increase is achievable by utilizing the benefits of a coarser grind and should result in increased copper and gold production commencing in 2009, as laid out in the PFS. Exploration subsequent to the resource estimates used in the PFS suggests additional potential beyond that laid out in the PFS.



    Metallurgical Information

    Metallurgical programs undertaken indicate recoveries from the Main Minto deposit averaging approximately 94% for copper, 74% for gold and 95% for silver. The Main Minto deposit is expected to produce a high grade concentrate, averaging approximately 36% copper, 10g/t gold and 150g/t silver. The concentrates are forecast to be free of any penalty level elements.

    By using a coarser grind, a mill expansion from 2,400 to 3,500 tonnes per day is targeted for 2009. To achieve similar metallurgical recoveries and improve concentrates grades when using a coarser grind, the addition of a regrind mill for the rougher copper concentrate is required. Test work indicates that the inclusion of a regrinding stage is results in a similar average copper recovery of 95%, a copper concentrate grade of 43.6% copper, an average gold recovery of 78%, marginally higher by 3% in comparison to previous test work, and an average silver recovery of 86%, about 9% lower that previous test work.

    Test work on Area 2 at the coarser primary grind and regrind, resulted in copper recoveries of between 90% and 94%, averaging 92%, with the exception of the P Zone. Gold recovery at the coarser primary grind was lower at an average of 64% than the standard Minto grind, or about 11% lower. On average, the copper concentrate grade was about 3% higher at 41.3% copper at the coarser primary grind with regrind in comparison to the standard Minto primary grind. Silver recovery averaged 81%, or 14% lower than the Minto Main deposit. The concentrates are forecast to be free of any penalty level elements.



    Price Protection/Hedging

    As of February 20, 2008, Sherwood entered into forward sales agreements for 49,924 tonnes (approximately 110.1 million lbs) of copper, 54,095oz of gold and 602,749oz of silver for delivery between March 2008 and October 2011 at prices well above those assumed in the pre-feasibility study announced December 12, 2007. This brings the total hedging to approximately 50 percent of the first four years productions which provides significant downside protection yet considerable upside opportunity as production plans increase. Total hedging represents less than 20% of Sherwood's currently defined in situ mineral resources. In addition, Sherwood has entered an off-take agreement for the sale of its concentrates at very attractive terms. The tables below summarize the forward metal sales position outstanding at February 20, 2008:

    Copper Forward Sales
    Year Pounds
    (000’s)
    Weighted
    average US$
    price pound
    % of Payable Copper
    2008 25,190 2.85 44.1%
    2009 32,825 2.49 63.4%
    2010 27,798 2.19 34.0%
    2011 24,251 2.41 57.1%
    Total 110,064 2.50 31.6%*
    * Life of mine

    Gold Forward Sales
    Year Ounces Weighted
    average US$
    price per ounce
    % of Payable Gold
    2008 12,126 653.33 49.5%
    2009 14,424 653.44 77.3%
    2010 14,025 653.46 39.6%
    2011 13,520 717.58 64.2%
    Total 54,095 667.45 37.1%*
    * Life of mine

    Silver Forward Sales
    Year Ounces Weighted
    average US$
    price per ounce
    % of Payable Silver
    2008 162,792 11.88 62.1%
    2009 156,579 11.90 59.7%
    2010 131,962 11.90 30.3%
    2011 151,416 13.50 77.5%
    Total 602,749 12.30 38.0%*
    * Life of mine



    Area 2 Pre-feasibility Study

    Click here for full Pre-feasibility Study Highlights

    A Pre-feasibility Study ("PFS") completed in December 2007 laid out a path for significantly increased copper production and enhanced project economics. The PFS looked at the economic potential of the Area 2 deposit, and incorporated several other concurrent Minto Project improvements that were identified post the August 2006 Feasibility Study, including the implementation of a coarser grind flotation feed. The PFS estimates a 45% increase in mill throughput, from 2,400 tonnes per day to 3,500 tonnes per day, and a 43% increase in total project copper and gold production with increased copper and gold production.

    The PFS represents an interim update on the Minto Project with resource estimates as of the end of 2006 and costs as of the end of 2007. However, continued exploration success in 2007, which could result in further reserve increases beyond those outlined in the PFS, and other optimization opportunities, suggest that additional value remains to be extracted from the Minto Project and Sherwood will continue to pursue the crystallization of these value opportunities. Based on the results of this study, Minto Explorations ("MintoEx") has begun the permit pre-application consultation process and will seek amendments to its current operating permits from the Yukon government in order to increase production and modify operating parameters to accommodate these and other proposed operational improvements.



    Project Opportunities

    Sherwood intends to pursue several project optimizations which may continue to enhance project economics. These are:
    • Resource/Reserve additions - Given the ability to increase mill throughput for minimal capital, the single biggest opportunity to increase value of the Minto Project is to add reserves. The 2006 Area 2 discovery was incorporated into the PFS, but the exploration successes of 2007 at Area 118, the southeast corner of Area 2 and Ridgetop offer near term potential for resource additions which were not included in the PFS. Resource estimates are in process for these areas, and additional drilling in planned in 2008 to more fully evaluate the potential of these and to drill test other areas;
    • Further optimization of the mine plan - Additional smoothing of production is planned as part of an on-going process of open pit optimization. The mine plan has not been fully optimized and further scheduling work is underway to smooth out some of the grade and ore extraction variations seen in this study. An additional iteration of the mine plan is currently being reviewed, with the objective of moving some of the exceptionally high grade production in 2010 forward into late 2008 and, thus having a positive effect on discounted cash flow;
    • Improved waste management to reduce costs - A viable waste rock dump alternative exists that will provide the mine with a significant cost savings by reducing the distance and elevation of the waste rock truck hauls. Sherwood's consultants are currently looking at the engineering aspects of a modified waste deposition plan;
    • Underground mining potential for deeper, higher grade areas - Sherwood has identified several exploration targets that may have the potential for underground mining. If these targets are put into Minto's resources, a study will be undertaken to determine if the deposits are sufficient in grade and volume to support underground development;
    • Improved gold recovery - In addition to a base recovery of approximately 74% assumed in the DFS, coarse visible gold has been observed in core during 2006-2007 drilling and a field trial of a gravity gold recovery circuit is planned for mid- to late 2008. This opportunity has not been incorporated in the PFS.




    Permitting

    The Minto Mine is currently permitted to process up to 912,500 tonnes of ore per year, or 2,500 tonnes per day. Increased mill throughput to 3,500 tonnes per day, and a new pit at Area 2, would require amendments to existing permits. Sherwood has begun the pre-application consultation process and intends to make formal application for the required permit amendments in early 2008 and plans to work closely with Yukon Government, Selkirk First Nation and other stakeholders through these permit amendments.




    Exploration

    2007 exploration drilling focused mostly on nine separate exploration target areas in addition to a small program dedicated to geotechnical/metallurgical drilling at the Main and Area 2 deposits as part of the 2007 Pre-feasibility study. One hundred and one exploration and geotechnical drill holes were completed for 23,292 metres, including ten holes drilled for geotechnical and metallurgical purposes; five in the Main pit and five at the Area 2 deposit. The objective of the 2007 exploration program was to more fully define the limits of the Area 2 deposit and provide technical information for the PFS, but mostly to broadly test a wide swath of the Minto property to the south, west and between the Minto and Area 2 deposits. Significant new copper-gold mineralization was discovered at the Area 118, Copper Keel, Airstrip and Ridgetop prospects and in the Gap between the Minto Mine and Area 2. Only geotechnical and metallurgical technical results from 2007 were incorporated into the Pre-feasibility study; none of the 2007 drill assay results were incorporated into the Pre-feasibility study. Mineral resource estimates incorporating the results of the 2007 drilling are underway and a significant 2008 exploration program is expected to commence in March 2008.

    Sherwood has signed a Memorandum of Understanding ("MOU") with Firestone Ventures Inc. whereby Sherwood's wholly owned subsidiary, Minto Explorations Ltd. ("MintoEx"), will receive an equity interest in a new public company to be created by Firestone in exchange for contributing four sets of mineral claims in the Minto region, access to MintoEx's extensive Yukon exploration database and participation in a regional exploration alliance. The new company, Northern Tiger Resources Inc., would give Sherwood's shareholders exposure to an exploration company focused on exploration targets generally located outside of, but in proximity to the Minto Mine property in central Yukon. In addition to its equity holdings in Northern Tiger, under the terms of the MOU, MintoEx would retain back-in rights to acquire a 65% interest in any of Northern Tiger's projects located within a 50 km radius that are found to have mineralization amenable to processing in MintoEx's existing Minto Mine facilities. Details regarding the nature and timing of this transaction are currently being finalized by Sherwood's and Firestone's management, and will be subject to Northern Tiger completing a successful private placement and obtaining required TSX-V, court, bank and regulatory approvals.



    Resource Disclosure

    The mineral resources for the Main Minto deposit were estimated by Giroux Consulting. Gary Giroux, P.Eng. is the Qualified Person under National Instrument 43-101 responsible for the estimate. Mineralization was interpreted in four zones and statistical analysis for each metal carried out for each zone. Assays were then composited for 3.0m intervals and statistical analysis completed for each metal and variography estimated for each mineralized domain. This geostatistical analysis was used to construct a block model, with individual blocks 10m by 10m by 3m high. A tonnage factor for each block was established, as in 1994 and July 2005, based on the kriged grade of copper. The basis for this interpretation came from an Asarco study completed in 1976. Additional bulk density information is being collected during the February drill program on all 2005 and 2006 holes to better define bulk density variations. Ordinary kriging was used to interpolate grades for copper, gold and silver into the block model. Blocks were then classified into Measured, Indicated and Inferred categories based on search ellipses dimensions tied to semivariogram ranges and the number of drillholes used in estimating each block.

    Lions Gate Geological Consulting Inc. ("LGGC"), in conjunction with SRK Consulting (Canada) Ltd. ("SRK"), conducted the Mineral Resource estimate for the Area 2 deposit. LGGC and SRK have reviewed pertinent geological information in sufficient detail to support the data incorporated in the resource estimate. Ali Shahkar, P.Eng. of LGGC is the Qualified Person under National Instrument 43-101 responsible for the estimate. SRK was actively involved during the estimation process, provided guidance with geostatistical analyses of copper and gold, estimation parameters to be used, and validated the copper and gold block model.

    Mineralization was interpreted in 5 domains (in some cases sub-domained into separate lenses) and statistical analysis for each metal carried out for each zone. Wireframes of these zones were created and used to inform a 15m by 15m by 3m (vertical) block model for resource estimation. Assays were then composited into 3.0m intervals and statistical analysis completed for each metal and variography estimated for the mineralized domains. Ordinary kriging was used to interpolate grades for copper and gold into the block model. Bulk density measurements collected during core logging were interpolated into the using Inverse Distance method. Blocks were then classified into Measured, Indicated and Inferred categories based on the number of drill holes and the average distance of the composites used to estimate each block. The grades and tonnages reported in this resource estimate represent the material contained within the mineralized portion of the classified blocks.

    Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resource estimates do not account for mineability, selectivity, mining loss and dilution. These Mineral Resource estimates include Inferred Mineral Resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these Inferred Mineral Resources will be converted to Measured and Indicated categories through further drilling, or into Mineral Reserves once economic considerations are applied.

    Mine design for both pits was initiated with the development of a Net Smelter Return ("NSR") model. The model included estimates of: metal prices, exchange rate, mining dilution, mill recovery, concentrate grade smelting and refining payables and costs, freight and marketing costs and royalties. The NSR model was based on a 15m x 15m x 3m block size for the Area 2 and Main Pit combined. The NSR block model was then used with the MineSight Lerchs-Grossman algorithm to determine the optimal mining shell. Detailed mine planning and scheduling was then conducted on the optimal pit shell and a mineral reserve was estimated. A 0.62% Cu cut-off was used within the planned pits.
    Pre-feasibility


    Background

    A Definitive Feasibility Study ("DFS") on the Minto Main deposit was conducted in 2006 by Hatch and positive results of the study led to the construction of the mine and mill. Commercial production was declared on October 1, 2007 with ore being extracted exclusively from the Main pit. In 2006, Sherwood geologists identified a possible extension to the main deposit, 130m south of the pit currently under development. An aggressive drill program was conducted which resulted in the discovery and definition of a significant new resource called Area 2. To assess the economic potential of the Area 2 resource, a Pre-feasibility Study ("PFS") was commissioned under the supervision of SRK Consulting (Canada) Inc.

    Expanded Scope

    In addition to looking at the economic potential of the Area 2 deposit, the study was expanded to incorporate several other concurrent Minto Project improvements that were identified post-DFS, including:
    • Implementation of coarser initial grinding in conjunction with a regrind of rougher cell concentrates;
    • Increase in mill capacity to 3,500 tonnes per day;
    • Utilization of grid electrical power;
    • Review of waste rock and tailings deposition options;
    • Optimization of the pit slopes for the Main pit based on new geotechnical data and analysis;
    • Improved recoveries for partially oxidized material.

    Highlights

    The PFS was completed in December 2007 and laid out the basis for production from the Area 2 deposit at a higher mill throughput than was defined in the 2006 DFS completed by Hatch Ltd. The PFS also incorporates a number of additional post-DFS optimizations. Highlights of the PFS, as compared to the DFS include the following:
    • Processing increased to 3,500 tpd from 2,400 tpd;
    • Higher metal production commences in 2008 as a result of processing higher grades first;
    • 43% increase in total copper and gold produced in concentrates;
    • 39% increase in pre-tax net present value at a 7.5% discount rate, 75% after tax;
    • 41% pre-tax IRR, 35% after tax based on $2/lb copper price plus completed forward sales;
    • 52% pre-tax IRR, 46% after tax based on forward copper price plus completed forward sales.

    The PFS represents an interim update on the Minto Project with resource estimates as of the end of 2006 and costs as of the end of 2007. However, continued exploration success in 2007, which could result in further reserve increases beyond those outlined in the PFS, and other optimization opportunities, suggest that additional value remains to be extracted from the Minto Project and Sherwood will continue to pursue the crystallization of these value opportunities.

    Permitting

    It is envisioned that, based on the results of this study, Minto Explorations will seek amendments to its current operating permits from the Yukon government in order to increase production and modify operating parameters to accommodate these and other proposed operational improvements.

    Economics

    The PFS costs were based on, in order of preference, actual contract costs, Minto 2007 and 2008 budget estimates and the 2006 DFS estimates. The principal differences between the 2006 DFS, 2007 PFS are set out in the table below, which illustrates both the Base Case and Forward Case.

    Comparison of 2006 FS and PFS (Base Case & Forward Case)

    Item

    Unit

    August 2006
    Feasibility Study
    (Main Deposit Only)

    Pre-feasibility Study
    (Main & Area 2
    Deposits) – Base Case

    Pre-feasibility Study
    (Main & Area 2 Deposits)
    – Forward Case

    Waste mined

    Millions t

    40.0

    63.8

    63.8

    Ore mined

    Millions t

    5.9

    9.5

    9.5

    Copper mill head grade

    % Cu

    2.20%

    1.90%

    1.90%

    Gold mill head grade

    g/t Au

    0.80

    0.70

    0.70

    Silver mill head grade

    g/t Ag

    9.13

    7.5

    7.5

    Copper in cons

    Millions lb

    259

    371

    371

    Gold in cons

    000’s oz

    108

    154

    154

    Silver in cons

    000’s oz

    1,470

    2,035

    2,035

    Concentrate Grade

    % Cu

    36%

    41%

    41%

    Copper Price (including hedging)

    US$/lb

    $2.00

    $ 2.16

    $ 2.75

    Gold price (including hedging)

    US$/oz

    $550.00

    $ 592.12

    $ 753.32

    Silver price (including hedging)

    US$/oz

    $9.00

    $ 10.18

    $ 13.71

    Exchange rate

    US$/C$

    $0.839

    $ 0.885

    $ 1.000

    NSR

    C$/t milled

    $101.94

    $ 88.84

    $ 103

    Unit Total OPEX (inc royalties)

    C$/t milled

    $45.45

    $ 47.18

    $ 47.12

    Unit operating costs after by- product credits

    US$/lb Cu

    $0.73

    $ 0.81

    $ 0.87

    Total Capital (initial and sustaining)

    $M

    $108

    $ 151

    $ 151

    NPV 7.5% pre-tax

    $M

    $127

    $ 177

    $ 275

    NPV 7.5% after tax

    $M

    $72

    $ 126

    $ 210

    IRR pre-tax

    %

    37%

    41 %

    52 %

    IRR after tax

    %

    27%

    35 %

    46 %



    As noted above, the DFS used flat metal prices throughout the life of the study, whereas the PFS Base Case uses the same metal prices (US$2.00/lb Cu, US$550/oz Au and US$9.00/oz Ag) for unhedged production but actual forward contract pricing for the metal forward sold. The Forward Case uses a conservative forward case of the current forward copper prices (which decline over time due to backwardation) but the current spot prices for gold and silver (without the benefit of the contango in these commodities) for unhedged production, actual forward contract pricing for the metal forward sold, and a US$ at parity with the Canadian dollar.

    Several opportunities outside of the PFS study remain to be evaluated. Included in these opportunities is the potential to add additional reserves through continued exploration, further optimization of the mine plan, improved waste management to reduce costs and underground mining potential for deeper, higher grade areas.

    Unless otherwise stated, all reporting is in Canadian dollars and metric units.

    To view the full Area 2 Pre-feasibility Study, please click here.
    Feasibility

    Sherwood completed its feasibility study in July, 2006 and updated it in August, 2006 to include a number of project optimizations. The project demonstrates robust economics, supporting Sherwood's prior decision to accelerate the development schedule of the Minto mine. A pre-feasibility study incorporating several post-feasibility project optimizations is scheduled for completion by the end of 2007.

    Feasibility Highlights

    The following sets out the highlights of the Feasibility Study prepared by Hatch Ltd. and certain other consultants, plus details of related financial aspects of the Minto Project based on the August 28, 2006 announcement:
    • Head grade of 3.3% copper & 0.94g/t gold in first year of operation, and averaging 2.4% copper and 0.88g/t gold over first six years;
    • Production averaging 41 million pounds of copper, 17,295 oz gold and 0.25 million oz of silver per year for first six years of operations;
    • Cash costs of US$0.57/lb, net of by product credits, over first six years of operations and US$0.60/lb over the life of mine;
    • Operating cash flow of C$49 million and C$61 million in Years 1 and 2 of operations, respectively, on an all equity basis (please see below for revised numbers);
    • Study uses 5-year average for metal price assumptions, comprised of 3-year historic and 2-year forward prices, that average to US$2.00 per pound for copper, US$550 per oz for gold and US$9.00 per oz for silver, and an exchange rate of C$1.192 per US dollar.
    • Life of mine production of 269 million pounds of copper, 113,000 oz gold and 1.6 million oz of silver in concentrates;
    • Total project pre-production direct and indirect capital cost of C$86.7 million, plus a contingency allowance of C$8.2 million and owner's costs of C$3.3 million.
    • Project financing - to complete construction of the Minto mine, Sherwood has closed a debt package with Macquarie Bank Ltd. totalling C$85 million, which is comprised of a C$65 project loan facility and a C$20 million subordinated debt facility.  Sherwood can also draw on a US$20 million inventory financing facility as concentrates are delivered to the concentrate storage shed.  
    • Rate of return of 37.1%, pre-tax assuming 100% equity financing (please see below for revised numbers);
    • Pre-tax net present value of C$126.9 million at a 7.5% discount rate, or C$152.1 million at a 5% discount rate, assuming 100% equity financing (please see below for revised numbers);
    • Payback in 2.4 years (please see below for revised numbers);

      Subsequent to the feasibility study, Sherwood entered into forward sale agreements representing approximately 75% of payable metal sales in the first four years of production (see table). In addition, Sherwood has entered an off-take agreement for the sale of its concentrates at very attractive terms.  Given these items, Sherwood estimates that the NPV has increased to C$188.8 million at a 7.5% discount rate pre-tax and the internal rate of return to 58.0%; payback would be reduced to 1.6 years, and pre-tax cash flow increase to approximately C$82 million in each of the first two years of operations on an all equity basis, respectively.

    The Minto deposit is an open pit mining operation with conventional crushing, grinding and flotation to produce high-grade copper concentrates with significant gold and silver credits. Concentrates are being exported via the port of Skagway, Alaska, to smelters in Asia for treatment and sale.

    The Detailed Feasibility Study prepared by Hatch Ltd. evaluated the recommencement of development at the high-grade Minto copper-gold project, and incorporated several material changes relative to previous designs. Most significant among the changes are accelerated pre-stripping to access high grades sooner, boosting near term production, expansion of the mill by more than 50% during the first year of operations, and stockpiling of all low grade (less than 1% copper) material during the first six years of operations in order to maintain head grades in the 2.5% copper range.  Results from recently completed exploration drilling at Area 2 indicate excellent potential for the definition of a significant resource, a resource that could materially extend the operating life of the Minto Mine at higher grades than planned in years seven and later.

    Several opportunities outside of the feasibility study remain to be evaluated. Included in these opportunities is a switch to grid power, optimized mine scheduling, forward sales, geotechnical optimizations, on-going metallurgical test work to reduce operating costs and increase mill throughput, favorable TC/RC's, and a trial gravity circuit to recover coarse visible gold which has been encountered in prior drill programs. A pre-feasibility study incorporating these project optimizations is scheduled for completion by the end of 2007.

    Unless otherwise stated, all reporting is in Canadian dollars and metric units.

    click to view drill results

    Exploration Programs


    2007 Exploration Program
    Sherwood's successful 2007 exploration program delivered high grade copper-gold mineralization from a number of targets. The program was carried out in two phases and was comprised of 91 exploration drill holes and 10 geotech/metallurgical drill holes totalling 23,292 metres of diamond drilling. Significant new copper-gold mineralization was discovered at the Area 118, Copper Keel, Airstrip and Ridgetop prospects and in the Gap between the Minto Mine and Area 2. Each of these areas has the potential to provide additional near surface resources beyond those considered in the December 2007 pre-feasibility study. Mineral resource estimates incorporating the results of the 2007 drilling are underway. In addition to near surface mineralization, several deeper high grade intersections at the Minto Mine are opening up the vertical dimension to this highly prospective property, a dimension that has received little exploration attention in the past. Highlights of each phase are as follows:

    Phase 1 Highlights:

    Phase 1 was completed in May 2007 and consisted of six deep exploration holes totalling 2,259m and five metallurgical drill holes totalling 443m.
    • Six deep exploration holes tested the 'Gap' target between, beneath and adjacent to the Minto Mine and Area 2 resource areas. The 6 exploration holes confirmed the presence of multiple, stacked, foliated and mineralized horizons throughout the 'Gap' target area and suggests there is reasonable geological continuity between the two areas;
    • Five metallurgical drill holes were drilled in the southern part of the Minto Mine reserve to collect metallurgical sample material for the current grinding optimization study. These holes equalled or exceeded grades and thicknesses projected from the resource model, including another exceptional gold intercept grading 46.2g/t gold over 1.1m and significantly higher than expected copper grades in another hole.

    2007 Phase 1 Drill Hole Location Map
    Minto-Gap-Area 2 Cross Section

    Phase 2 Highlights:

    Phase 2 commenced in June and was completed in October with a total of 85 exploration drill holes and 5 geotech holes for 20,917m of drilling completed. The objective of the Phase 2 exploration program was to more fully define the limits of the Area 2 deposit and provide technical information for the PFS, but mostly to broadly test a wide swath of the Minto property to the south, west and between the Minto and Area 2 deposits. Significant new copper-gold mineralization was discovered at at the Area 118, Copper Keel, Airstrip and Ridgetop prospects. In addition, an extensive geophysical program was completed. Highlights from Phase 2 include:
    • Ridgetop - located approximately 1km south of the Minto open pit, assay results confirmed the presence of near surface (3-12m deep) copper-gold mineralization, including chalcocite enrichment zones, over significant thicknesses. Results included 10.3m of 2.72% copper and 1.37 g/t gold, 7.5m of 2.08% copper and 0.81 g/t gold, and an exceptionally thick, near surface intersection of 88.8m grading 0.75% copper including 13.7m of 2.04% copper.
    • Area 118 - located approximately 350m south of the current open pit and immediately adjacent to the Area 2 deposit, Area 118 is a large system, measuring more than 500m by 200m in aerial extent. Preliminary interpretations of drilling to date favour a fault model in which the Area 118 mineralization is equivalent to the deeper Area 2 horizons that are now faulted upward and juxtaposed against upper Area 2 mineralization. 2007 drilling indicates the presence of a higher grade core within the Area 118 deposit and provided further confirmation of high grade copper-gold mineralization where the Area 118 and Area 2 deposits join. Results included 9.1m of 3.40% copper and 0.87g/t gold and 15.0m of 3.09% copper and 1.03g/t gold.
    • Airstrip SW-Copper Keel - located approximately 500m east of Ridgetop, this prospect was thought to comprise two separate targets but now appears to be one system with two markedly different styles of copper mineralization. One is the chalcopyrite-bornite-magnetite-gold mineralization typically found throughout the Minto project. The second type is coarse grained chalcocite-gold (+/- native copper) associated with mixed iron oxides. Results included 4.1m of 3.10% copper and 2.27 g/t gold starting at only 68.2m below surface and 2.79% copper and 0.93g/t god over 4.2m starting at only 99.9m below surface.
    • Potential Area 2 expansion to the southeast - Hole 07SWC-269 stepped out more than 110m to the southeast of the nearest 2006 Sherwood hole used in the Area 2 Pre-feasibility Study, opening up the potential for a near surface expansion of the Area 2 deposit. The drill hole encountered shallow, high grade mineralization which is in close proximity to the Area 2 reserves. The good grades and shallow depths of this mineralization in an area immediately adjacent to Area 2 make this a high priority target for drill testing in 2008 and could lead to potential resource expansions.
    • Gradient IP Geophysical Survey - results include the definition of a large chargeability anomaly in an under-explored area that was previously thought to be of low prospectivity. The edge of this new anomaly correlates with recent drill discoveries of high grade copper-gold mineralization at Airstrip and Copper Keel, suggesting additional potential beyond the scope of recent drilling. Also of potential significance are several newly identified chargeability anomalies located north of the main Minto pit, indicating exploration potential north of the Minto Mine, in areas that have received only very cursory exploration drilling.

    2007 Phase 2 Drill Hole Location Map
    Detailed Gradient IP -- Sept 2007

    Mineral resource estimates incorporating the results of the 2007 drilling are underway and all 2007 information will be used to lay out the priorities for a significant 2008 exploration program to follow up on the exciting 2007 discoveries. Given the very encouraging 2007 exploration drill results to date, there would appear to be excellent opportunities for further resource additions that could potentially support additional production expansions or an increased mine life.

    2006 Exploration Results
    In 2006, Sherwood completed a total of 24,252 metres (79,567 feet) of NQ diamond drilling in a two-phase program.

    • Phase 1 comprised 4,129 metres of resource definition drilling within the main deposit and a limited amount of exploration drilling. The resource definition drilling was successful in confirming higher gold grades in the northern 1/3rd of the Minto deposit and three of the five exploration holes resulted in the discovery of a significant new body of mineralization -- the "Area 2" discovery.
    • Phase 2 was planned as a 16,500m exploration program focused on several exploration targets outside of the main Minto deposit. Given the outstanding results from Area 2, the program was expanded to 20,123m and resulted in the delineation of a significant zone of high grade copper-gold mineralization at the Area 2 target, approximately 130m from the open pit (click here). Drilling extended far beyond of the initial target area and a significant new resource was defined.
      • The total contained metal in the Area 2 Measured and Indicated Resource estimate represents a 61% increase in contained copper and a 75% increase in contained gold versus the resource estimate for the main Minto deposit at a 0.5% copper cut-off.
      • Area 2 is being advanced through a pre-feasibility study with the objective of adding to the high-grade reserve base during Q3/2007. It remains open to expansion in a number of directions, offering further potential beyond that defined to date.
    • A summary of the 2006 drilling is set out in the table below:


    Area Purpose No. of Holes No. of Metres No. of Feet
    Minto Deposit Resource Delineation and Confirmation 20 2,433 7,982
    Area 2 Discovery/exploration & resource delineation 79 18,376 60,289
    Other Targets Testing targets other than Area 2 20 3,443