Business Context and Reporting Period
Company: NovaCopper Inc. (Note: Request metadata listed Trilogy Metals Inc., but the filing text identifies NovaCopper Inc.)
Filing Type: Form 8-K (Current Report)
Date: February 5, 2013
Subject: Disclosure of a new mineral resource estimate for the South Reef zone of the Bornite Project in Alaska.
Key Financial Metrics
This filing is a Regulation FD disclosure regarding technical resource estimates and does not contain financial statements, revenue, profit, cash flow, debt, or liquidity metrics. The filing text does not provide a clear value for any financial performance indicators.
Material Changes and Technical Updates
The Company released an initial NI 43-101 compliant resource estimate for the South Reef zone of the Bornite deposit. This is the second resource estimate for the project, following a July 2012 estimate for the Ruby Creek zone.
- South Reef Zone (Base Case 1.0% Cu cutoff): 43.1 million tonnes at 2.54% copper, containing 2.4 billion pounds of copper.
- Resource Classification: Inferred Resources.
- Location: Approximately 500 meters southeast of the Ruby Creek zone.
- Drilling Basis: Model developed using 42 drill holes (29 by NovaCopper, 13 historic by Kennecott).
Guidance, Outlook, and Risks
Management Commentary: The resource remains open to expansion in multiple directions. The South Reef zone is considered potentially economically viable in an underground mining scenario based on an assumed copper price of US$2.75 per lb and operating costs of US$60 per tonne.
Risks and Contingencies:
- SEC Cautionary Note: The term "Inferred Resource" is not recognized by the SEC. There is significant uncertainty regarding the existence and economic viability of these resources.
- Conversion Risk: Mineral Resources are not Mineral Reserves. There is no certainty that any part of the resources will be converted into reserves.
- Regulatory Differences: Disclosure standards (NI 43-101) differ significantly from U.S. SEC standards regarding the classification of mineralization.
Investor Verification Checklist
- Verify the distinction between "Inferred Resources" (reported here) and "Mineral Reserves" (required for economic viability under U.S. standards).
- Confirm the assumed copper price (US$2.75/lb) and operating costs (US$60/tonne) used for the economic viability assessment.
- Review the attached press release (Exhibit 99.1) for full details on the drilling campaigns and geological models.
- Assess the uncertainty associated with the 13 historic Kennecott drill holes that were re-logged and re-assayed.