Project of the Week: Trilogy Metals, The Upper Kobuk Mineral Projects

7th July 2021

This week’s standout project (or should I say projects) are part of the exploration portfolio of Trilogy Metals Inc (TSX:TMQ), a Canadian exploration outfit, with the aim of exploring and developing their two properties in the Ambler Schist Belt of north western Alaska. They are targeting polymetallic volcanogenic massive sulphide deposits, a fascinating (and favourite of mine) subset of ancient near sea-floor deposit that can contain a plethora of metals. In this region, Trinity Metals can offer their shareholders exposure to copper, zinc, lead, gold, silver, and cobalt through their “Arctic” and “Bornite” projects. The demand for this suite of metals is all forecast to have increase over the next 10 years in support of the green economy.

So, what do Trilogy have going for them…? A mining friendly jurisdiction? Great relations with the traditional land owners? A juicy JV agreement with a top tier producer? If you said “all of the above”, congratulations! First and foremost however, is the geology they have at the licences, and what potential it has for hosting a developable copper (plus biproducts) resource.
The Ambler Schist Belt, the terrane that hosts massive sulphide deposits, is composed of Devonian to Proterozoic metamorphosed sediments, mainly pelitic schists, quartzites and carbonates which are intruded by granitic gneisses of Palaeozoic age. These formations are unconformably overlain by quartz-mica schists with intervals of metarhyolites and greenstones with other minor constituent lithologies; all of which are known to host economic volcanogenic massive sulphide deposits.

Geology of the Arctic prospect.
Figure 1. Geology of the Arctic prospect.

VMS occurrences in this district are typically stratiform and conformable with metarhyolitic units. Sulphide lenses consist of finely banded pyrite, chalcopyrite, sphalerite ± galena and metal oxides. Mineralisation at the Arctic deposit occurs as these sulphide-rich beds or lenses that vary in thickness from 1-18 m. Sulphide mineralisation occurs mainly as chalcopyrite, sphalerite, galena, tetrahedrite, arsenopyrite plus iron sulphides in addition to small amounts of Au-Ag alloys. The resource covers approximately 1 km2 with mineralisation currently known to reach a depth of 250 m. For those that are unacquainted with the VMS deposit family, lets do a quick rundown of their formation and mineralogy.

VMs deposits are base and precious metal deposits associated with submarine volcanic rocks (commonly bimodal volcanics) and are restricted to extensional tectonic settings, where fluid pathways are focussed on normal faults that also typically have a heat source at depth to drive fluid circulation. Metals are typically thought to be deposited at, or below the seafloor where the seawater-hydrothermal fluid interface lies. Sulphides are hosted in stratiform lenses/beds (as described for the Arctic deposit) and in discordant, brecciated stockwork zones below the main sulphide accumulation. Global VMS mining camps such as the Arabian-Nubian Shield and the Troodos Massif tend to be clustered along past and current continental margins, and most deposits are found in obducted ophiolite sequences, associated with ocean closure events.

A fairly classic figure from Galley et al (2007) outlining different VMS deposit type and how the host rocks can alter the morphology and mineralogy.
Figure 2. A fairly classic figure from Galley et al (2007) outlining different VMS deposit type and how the host rocks can alter the morphology and mineralogy.

The mineralogy of VMS deposits can vary greatly depending on the source rocks the metals have been sourced from and the paleoenvironmental conditions they formed under. For example, gold-rich VMS deposits, such as Bisha in Eritrea are interpreted to have formed in a much shallower marine environment/intertidal zone than a more base-metal dominated system like Arctic. It is this variation that makes them so interesting to geologists like me!

The main plus that the Arctic deposit has going for it is the 5% CuEq grade for all contained metals. This is far above what is normally considered high grade for a copper-dominant deposit and is part of the reason for the impressive IRR and NPV. With the current copper price, the value of the deposit has increased significantly since the feasibility study was released last year. The thing is though, Arctic isn’t just all about copper! The other metals contained all contribute to this inflated NPV of $2.6B after tax.

In addition to the pure economics of the deposit, a massive factor in the ability to develop this asset is the construction of a haulage road connecting the district to the local highway system. This is obviously essential for haulage of ore once the mine enters production, which according to CEO Tony Giardini, will commence around 2028, if all goes to plan. Without infrastructure like this in place, the grades and shiny metals mean nothing as they cannot be taken out the ground, and as such Trilogy have committed to spending $70m over the next three years on engineering for the construction of the haul road; an investment they see as good value for money.

Overview of the proposed open pit and tailings dam for the Arctic deposit.
Figure 3. Overview of the proposed open pit and tailings dam for the Arctic deposit.

The big news for Trilogy over the last year or so has been the sugar daddy JV deal with South32, which has provided Trilogy with $145m cash in exchange for 50% of the subsidiary in control of Arctic and Bornite. These funds are earmarked for a bumper drilling program this summer and supply of further work for the next five years. $27m of the South32 piggy bank is earmarked for drilling this summer with 7600m planned at Arctic, but with much more going into testing targets that could be satellites of Arctic. The season is relatively short in northern Alaska so after October, drilling will be suspended until next year when the same scale of work is planned. This investment from South32 is a big validation of the work done since 2004 by Trilogy and paves the way for going into production by the end of this decade.

Structure of Ambler metals, the subsidiary responsible for the Arctic deposit.
Figure 4. Structure of Ambler metals, the subsidiary responsible for the Arctic deposit.

So, in my opinion, this is a financially backed project with really nice geology and the groundwork for future development in place. The future looks bright for Trilogy and their shareholders.

All information in the above article is sourced from the Trilogy Metals website and materials within, unless otherwise stated.

Sources:

Trilogy Metals Website:

https://trilogymetals.com/properties/arctic/

Arctic Project Technical Report:

https://trilogymetals.com/site/assets/files/5394/2020-10-02-arctic-feasibility.pdf

Trilogy Metals 2021 field season:

https://trilogymetals.com/site/assets/files/5576/2021-05-17_tmqpr_2021_project_update_final.pdf

Galley, A.G., Hannington, M.D., and Jonasson, I.R., 2007, Volcanogenic massive sulphide deposits, in Goodfellow, W.D. ed., Mineral Deposits of Canada: A Synthesis of Major Deposit-Types, District Metallogeny, the Evolution of Geological Provinces, and Exploration Methods: Geological Association of Canada, Mineral Deposits Division, Special Publication No. 5, p. 141–161, doi:10.1007/978-1-4613-0859-1_5.