Summo makes plans for copper prospects

With an initial public offering in the works, Summo Minerals plans to begin drilling its Lisbon Valley property in San Juan Cty., Utah, about 45 miles southeast of here.

The company was formed to pursue the late-stage exploration and development of several sandstone-hosted copper deposits using heap-leach/solvent extraction-electrowinning technology.

The planned share issue includes 1.5 million shares at 60 cents each and will net the company about $825,000, bringing the issued capital up to 11.7 million shares on a fully diluted basis.

St. Mary Land & Exploration Company (NYSE) is one of the founding shareholders of Summo and will hold about 29% of the issue on a fully diluted basis following the issue.

Six different copper deposits have been identified at Lisbon Valley, with exploration, development and production spanning almost 100 years. Three of these have essentially been mined out, leaving the GTO, Sentinel and Centennial deposits. The Northern Miner recently toured the Lisbon Valley property.

Much of the historic work took place after 1969 when Keystone-Wallace Resources rebuilt a copper leach plant on the property and proceeded with mining four of the deposits through to 1973.

The company mined and processed about one million tons, including 350,000 tons grading 1.25% copper from the Centennial deposit, 400,000 tons grading 1.75% from GTO, 100,000 tons grading 1.2% from the Blue Jay deposit and 100,000 tons grading 0.45% from Sentinel.

Mineralization on the Lisbon Valley property is directly related to structures and stratigraphy.

The Lisbon Valley represents a breached salt anticline faulted along its axis by the Lisbon Valley Fault. The northeast side of the fault is down-dropped over 3,000 ft. relative to the southwest side. The best copper mineralization occurs in four or five distinctive sandstone beds on the northeast side of the fault.

“This is layer-cake geology”, quipped Gregory Hahn, executive vice-president of St. Mary.

St. Mary originally acquired the property in the name of Summo Minerals and is overseeing work on the project.

Copper mineralization occurs predominantly as oxides within 150 ft. of surface, while sulphides take over at depths below the water table at 300 ft. Oxide minerals include azurite, malachite and cuprite as evidenced by the vivid greens and blues seen during a tour of old pits above the Sentinel and Centennial deposits. Sulphide copper mineralization includes covellite, bornite and chalcocite.

Summo is concentrating its work on Centennial and Sentinel, which are less than a mile apart from each other along the Lisbon Valley Fault. The two deposits have accumulated 800 rotary, core and reverse circulation drill holes over the years.

The Centennial is the largest and best-explored of the deposits and comprises three or four overlapping lenses within a 300-ft. stratigraphic section. The lenses dip 5-25 toward the Lisbon Valley Fault and vary from 40 to 150 ft. in thickness.

A 1989 estimate by MHP Consulting put the minable reserve at 9.5 million tons grading 0.77% copper. That compares well with a 1974 calculation by Pincock Allen and Holt which put the total at 8.3 million tons grading 0.69% based on fewer drill holes.

Sentinel consists of a 41-ft.-thick tabular body dipping 10-25 to the southwest toward the Lisbon Valley Fault.

MHP calculated reserves in the Sentinel deposit in 1992, putting the total at 4.6 million tons grading 0.38% copper based on a 0.2% cutoff. Hahn said the stripping ratio for Sentinel is low, at less than 0.5-to-1, while Centennial’s is about 2.2-to-1.

A third deposit, the GTO, is a mile south of Centennial, but no reserve estimate is available.

Funds from the initial public offering will be used to conduct infill as well as perimeter drilling on the Centennial and Sentinel deposits. “There’s good tonnage potential immediately to the east, as well as north, of Centennial,” Hahn said.

Perimeter drilling on Sentinel will test the west side of the Lisbon Valley Fault as well as for extensions along the fault to the southeast. “The planned drilling program is designed to double the reserve”, Hahn said. Looking to the future, he believes the project could be up and running for about US$30 million based on a 2.5-million-ton-per-year leaching operation using its own mining fleet.

The figure is “ball-park,” given that a feasibility study has not been completed, but Hahn is confident the company has a future mine at Lisbon Valley. He said Summo will consider joint-venturing the property to an experienced operator but added that developing the project independently is not out of the question.

The company also holds an option to acquire the Cashin property in return for US$900,000 in cash. The property is about 20 miles northeast of the Lisbon Valley property in Montrose Cty., Colo.

Copper mineralization occurs in faults and within sandstone as malachite, azurite, chalcocite, covellite, chalcopyrite and bornite, with small amounts of native copper and native silver.

Two small-scale underground mines operated at the property on an intermittent basis during the first half of the century. Records put the historic production at 1.8 million lb. copper and more than 420,000 oz. silver from 23,151 tons of ore.

A portion of the public offering will be used to fund initial work on Cashin at an estimated cost of $56,000. Work will include rehabilitating the underground workings followed by underground sampling and mapping, as well as a surface geochemical survey.

Hahn said St. Mary is also looking at a third property, which he described as a potential open-pit oxide copper project.