Starfield Resources (TSX:SRU) recently announced that it has developed an environmentally friendly way to process ore at its 100% owned Fergson Lake Project in Nunavut where the company has been exploring for, and finding, nickel, copper, cobalt and platinum group elements.
It seems that necessity bred invention for Starfield at Ferguson Lake. The method typically used by mining companies, of crushing ore and using flotation to separate the mineral from the ore was not an option at this project. Instead Starfield devised to dissolve the leftover ore in hydrochloric acid, producing hydrogen sulphide gas. Burning the by-product gas as fuel will produce enough energy to power the project and then some. While the process of dissolving the ore is not entirely new, burning hydrogen sulphide gas for power is novel. It makes sound economic sense, and it is green. So says Bryn Harris, a hydrometallurgical consultant on the project.
“There’s probably going to be enough power left over that we could operate the whole town of Rankin Inlet, should we choose to do so,” said Harris said in an interview with CBC.
Adding to the economic benefits of the process, both iron and sulphuric acid are byproducts and can be sold for secondary income. Sulphuric acid is in short supply in the world at the moment, making it a commodity that Starfield could potentially profit from substantially.
From the environmental standpoint, Harris said, “If we were to import and burn fuel oil to make the equivalent amount of energy, we would be liberating something like 60 tonnes of carbon dioxide into the atmosphere every hour.”
The company completed a scoping study in late March of this year, which indicated a positive economic outlook for the project, so much so, that Starfield President Andre Douchane plans to skip pre-feasibility and move straight to a feasibility study due in early 2010. Part of that success was due to the economic benefits of this ‘green’ power generation. The Hydromet process, allowing for by-product electrical power production is highlighted as a key economic benefit in the scoping study.
The scoping study outlined a mine life lasting until 2030 with 27.5 million pounds of nickel, 43.6 million pounds of copper and 2.9 million pounds of cobalt expected to be produced annually.
Today’s copper price of about $4.00 represents a climb from the $3.50/lb mark a year ago. Nickel has declined to $13.35/lb from its unsustainable heights a year ago. However, cobalt has risen from $30.00 to over $52.00/lb in the last six months. So that even with the most conservative price estimates, which Starfield used in the scoping study the current resource totals somewhere near half a billion dollars.
The study did not account for additional economic benefits of 9.5 million tonnes in the property’s East Zone and it did not include the potential for the platinum group elements. Starfield announced rhodium assays in a March 2008 press release. The assays revealled significant rhodium on the property given that current rhodium prices are over US $9.000.00/ounce. Summer drilling in 2008 will include further defining the mineralization in the high grade platinum group element zone on the property huge, 1.3 million acre property, while also exploring for potential gold and kimberlite.
If the potential at this property seems endless, it’s of note that the scoping study, also, did not factor in the potential for selling excess electric power from the company’s environmentally-friendly power plan. Additionally, it didn’t include possible profit from selling by-products like sulphuric acid and iron oxide.
Who can argue with both environmental benefits, and sound economics? According to Harris the process is applicable at other world mining sites and is currently being considered for use in Canada and Australia.
Starfield Resources stock is currently trading at $0.91 on the Toronto Stock Exchange. Starfield has 301 million shares outstanding.
-Katherine
