Azco OKs sale of copper properties to Phelps Dodge

At a reconvened special meeting, the proposed sale of two copper deposits was finally approved by shareholders of Azco Mining (TSE).

Azco now has the mandate to close a US$40-million transaction with Phelps Dodge (NYSE), involving the outright sale of the Sanchez copper deposit in southeastern Arizona and a 70% interest in the Piedras Verdes copper deposit in Mexico’s Sonora state.

Azco will continue to hold a 30% interest in Piedras Verdes, as well as a full interest in the Suaqui Verdes copper project, also situated in Sonora. It is the intention of both Azco and Phelps to advance the Piedras Verdes project to the feasibility stage, with the former’s expenditures limited to US$3 million.

If the project proceeds to development, Phelps will arrange debt financing for up to 60% of the project’s capital costs, leaving Azco responsible for 30% of the remaining 40% equity portion.

The Piedras Verdes contains an oxide resource estimated at 154 million tons grading 0.41% copper. Additional drilling will attempt to increase reserves and categorize them as proven and probable.

Upon the closing of the transaction, Phelps Dodge will acquire a full interest in the Sanchez deposit, which hosts a minable reserve of 229 million tons grading 0.29% copper. A feasibility study projects yearly output of 56 million lb. copper over 20 years at an average cash cost of US52 cents per lb.

In other news, Azco has cancelled its proposed merger with Princeton Mining (TSE). Alan Lindsay, Azco’s chairman and chief executive officer, says a failure to reconcile differences in the interpretation of the agreement between the two parties led to Azco’s decision not to proceed with plans to merge into a single company.

Azco and Princeton were in disagreement as to the requirement of a $3-million credit facility. Princeton responded by stating it will not pursue the Azco merger.

Meanwhile, Princeton, which operates the Similco open-pit copper mine in British Columbia, is awaiting permitting approval for its Huckleberry copper project, 78 miles south of Smithers, B.C.