March 3, 2010

The main construction on the Mt Milligan Mine involves a pre-engineered building for processing, which requires significant concrete work for a strong foundation.

Terrane Metals Corp. set to start construction on mine near Fort St. James, British Columbia

RICHARD GILBERT

staff writer

Terrane Metals Corp. is considering options for financing construction on the Mount Milligan Mine project, as the company moves forward with one of the first major mines to be developed in British Columbia in a decade.

Construction of the $915-million copper-gold project mine, which will be located 90 kilometres north of Fort St. James, is expected to begin this summer.

Terrane modified their plans and announced a start date in the third quarter of 2010, in response to the global credit crisis.

However, this date is also dependent on market conditions and there is a two year window to get things going.

“In the initial year, the big expense is getting the long lead items started,” said Wes Carson, director of mining with Terrane.

“We have a contract in place for a SAG mill, which is the primary crusher, and two ball mills. We have a big transformer to put in and a substation in Kennedy. We also need to get into the detailed engineering of the plant.”

A SAG (Semi-Autogenous Grinding) mill utilizes steel balls in addition to large rocks for grinding.

A ball mill is a slightly inclined or horizontal rotating cylinder, which is partially filled with balls of stone or metal.

Construction will initially involve a 92 km long 230 kV electrical power transmission line from the mine site to the Kennedy sub-station, which is just outside MacKenzie.

Goldcorp Inc. recently allowed an option agreement to expire, which would have allowed the company to convert their equity interest in Terrane into a participating joint venture.

As a result, Terrane obtained a $40 million credit facility guaranteed by Goldcorp, which has been extended to May 7, 2010.

The clarification of ownership also allowed Terrane to obtain financing to develop the Mount Milligan project.

The company is considering financing alternatives for the recently approved $172 million 2010 construction budget.

“In the $172 million, there is also field work which includes access roads, a field camp, power lines and some initial water dams for water collection,” said Carson.

“The next step would be to get into the main construction of the building for processing. The building will likely be pre-engineered and have significant concrete work and a strong foundation.”

Carson said this will be required for the installation of a 40 foot diameter grinding mill.

The foundation must be able to deal with the wild forces generated by the spinning rock.

At the same time that work is taking place on the process plant, a warehouse, administrative building and truck stop will be built.

According to Carson, the primary earthworks on the project are the mill tailing and waste rock storage facilities, including containment dams and other associated structures.

Construction on the mine project is expected to begin this summer.

The waste material from the ore will go into a ring dam made of sand and water.

The starter dam will be 25-40 meters in height and seven kilometres long. The waste rock will go into the construction of the dam until it reaches a maximum height of 100 metres and an average height of 65-70 meters.

This approach means it will not be necessary to take waste material to the dump.

Construction is expected to generate 1,000 jobs at its peak and the 30-month construction phase will provide an average of 370 jobs.

Once construction is completed, the open-pit copper-gold mine will have the capacity to process 60,000 tonnes of ore per day.

The company plans to have the mine in production by the end of 2012 or early in 2013.

Production requires large mining equipment, haul trucks and cable shovels.

A 2009 Feasibility Update Study forecast average annual production of 262,100 ounces of gold and 89 million lb copper for the first six years of operation. The project will provide about 400 direct permanent jobs and support 1,200 indirect jobs over its 22-year life.

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