Junior eyes copper-nickel mine near Agnew Lake.

A new copper-nickel mine, and a mill to go with it, may be in the works in the Agnew Lake area, west of Greater Sudbury.

A favourable feasibility study indicates junior miner URSA Major has a good economic case to build a $118-million open-pit mine and 4,500-tonne-per-day concentrator on their Shakespeare property, located 70 kilometres west of the city.

Together with financing partner North American Palladium (NAP), plans call for the operation to employ 152 people, including 90 workers servicing the pit with the remainder filling mill and administrative positions.

URSA Major president and CEO Richard Sutcliffe says once financing details with NAP are finalized and permitting is complete, development could tentatively begin in 2007 with operations starting in 2008.

The property is situated north of the town of Webbwood along Agnew Lake's north shore.

Last year, URSA entered into an option and joint venture agreement with North American Palladium to explore and develop the Shakespeare deposit along with URSA's adjacent Baldwin-Porter nickel-copper property.

NAP, owners of the Lac Des Iles mine near Thunder Bay, has six months to exercise the option and provide 100 per cent of the project financing for Shakespeare.

A spokesperson for NAP says the company's board of directors is still considering the feasibility study.

The feasibility study defines a diluted probable reserve of 11,266,000 tonnes grading 0.33 per cent nickel, 0.35 per cent copper, 0.02 per cent cobalt, 0.37 grams per tonne palladium (g/t), 0.33 g/t platinum and 0.19 g/t gold. The reserve is based on an indicated resource of 12.4 million tonnes grading 0.35 per cent nickel, 0.37 per cent copper, 0.02 cobalt, 0.35 g/t platinum and 0.39 g/t palladium and 0.20 g/t gold.

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The mineral reserve is projected to a maximum depth of 250 metres.

An agreement signed last summer between the two companies indicates that upon successful completion of a viable feasibility study, the Shakespeare property becomes 60-per-cent owned by NAP. It also arranges the financing for commercial production.

URSA is also seeking a smelter contract with Inco to truck nickel concentrate to Sudbury, but negotiations are on hold pending the completion of the nickel giant's merger with Falconbridge.

"As a consequence of their discussions, there hasn't been much ability to make headway with them at this point," says Sutcliffe.

It forced URSA to revise their 2006 start-up plans for Shakespeare resulting in a larger mill facility from their earlier plans for a 2,900 tonne-per-day facility.

Based on their truck haulage costs, they had plans to ship to Falconbridge's Strathcona mill for processing, but Falconbridge couldn't make the commitment.

"Now a bigger and more substantial operation is being envisioned," which should increase the project's capital costs but improve its economics and overall value, says Sutcliffe.

Montreal-based engineering company Met-Chem has been selected to design the $48.6 million concentrating facility.

To reduce some costs, NAP is contributing unused milling equipment from their Lac des Iles Mine.

URSA acquired Shakespeare from Falconbridge six years ago. A small mineral resource was known to be on the property, "but I liked the geology and I liked the location," says Sutcliffe.

A significant near-surface discovery in 2002 helped fast track the project forward.

"This (project) was made as a result of the discovery we made in 2002," says Sutcliffe. "That was flow-through financed and that's certainly one of the upsides of being able to access exploration funds through these incentives. We're a success story from that."

Sutcliffe has high hopes that there is a larger reserve close to the proposed pit that would extend the mine's life beyond seven years. The feasibility study states there is an additional indicated resource of 1.8 million tonnes.

URSA is finalizing its exploration targets for 2006 and intends to be active with a $1-million program.

Most of the preparatory work at the Shake-speare site this year will be permit-related. The company has built a bush road into the site and installed water monitoring wells.

"We won't be proceeding with any construction until we have the permitting," says Sutcliffe.

Golder Associates will manage the year-long permitting process.

"We're working hard to make sure the environmental issues are dealt with (and) we don't see any significant factors that will be negative to the environment," says Sutcliffe.

"Once people see the wealth and job creation from this type of project, it becomes clear on the economic spinoff," says Sutcliffe. He expects every direct mining job will create two spinoff jobs in the area.

Besides the Shakespeare project, URSA Major maintains other copper-nickel and uranium properties under exploration in northeastern Ontario. They also have a 9.4-per-cent stake in Patricia Mining Corporation's Island Gold project near Wawa, which is expected to come into production this year.

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Their advanced Shining Tree copper-nickel project, 110 km north of Sudbury, has a great potential, says Sutcliffe. They released a resource estimate in February revealing an indicated resource of 1.02 million tonnes grading 0.71 per cent nickel and 0.36 per cent copper plus an inferred resource of 1.49 million tonnes grading 0.67 per cent nickel and 0.36 per cent copper.

"We're quite encouraged with the resource there and think we've got a chance to advance that as a satellite to Shakespeare," says Sutcliffe.

Last year, the company acquired the former Agnew Lake uranium mine. It is conducting exploration to evaluate that property.

Although the resource is not high-grade uranium, Sutcliffe says Kerr Addison Mines spent a substantial amount of money on infrastructure and the cost of going back into production would be substantially less than starting from scratch. Kerr Addison mined 1.1 million pounds of uranium between 1977 and 1983.

But what's more intriguing to Sutcliffe are the other "rare earth" metals associated with uranium on the property that "enter the economic picture." Results from their October-November drilling program are expected this winter to evaluate the project's potential.

www.ursamajorminerals.com

www.napalladium.com

BY IAN ROSS 

Northern Ontario Business