Copper Mountain gets the go-ahead

Vancouver — Copper Mountain Mining (CUM-t) is not letting global financial turmoil or a falling copper price get in its way: the company is going ahead with development plans at its Copper Mountain project, where a recent feasibility study predicted production could restart at the old mine as soon as 2010.

The company’s board of directors authorized management to go ahead with development at Copper Mountain, a historic mine near Princeton, B. C., that has been closed since 1996. Long lead-time major equipment items, such as loading and hauling mobile equipment, as well as the semi-autogenous grinding and ball mills, have already been ordered and site preparations, such as the restoration of power, water and sewers to the administration building, are under way.

In making the production announcement, Copper Mountain CEO James O’Rouke said that in light of financial uncertainty in the overall markets the company “plans to proceed in a prudent manner to meet our production goal by the end of 2010.”

The decision comes a few weeks after Copper Mountain announced that Mitsubishi Materials signed on to participate in developing the project. A memorandum of understanding between the companies stipulates that Mitsubishi will acquire 25% of the project for $28.75 million. Mitsubishi will also be responsible for arranging a $250-million project loan and as part of the agreement has already committed to purchase all of the copper concentrate from the mine, which is expected to average 150,000 dry metric tonnes per year for the first 10 years.

The summer feasibility study looked at the viability of a conventional open-pit mine feeding a 35,000-tonne-per-day mill designed to produce 100 million lbs. copper per year in concentrate, with gold and silver credits. Capital costs are estimated at $402 million to build a mine with a 15-year mine life. The project’s pretax internal rate of return came in at 20.2% and the pretax net present value, using a 5% discount rate, is $263 million.

At a 0.2% copper cutoff grade, Copper Mountain is currently home to 260.2 million tonnes of measured and indicated resources grading 0.357% copper, plus 164 million indicated tonnes grading 0.29% copper. Proven and probable reserves, defined in terms of the planned superpit that will grow three historic pits together, total 194.6 million tonnes grading 0.33% copper.

Soon after releasing the Copper Mountain feasibility study, the company closed the purchase of a tailings management facility for the project. An independent company owned a tailings facility within the Copper Mountain property; Copper Mountain bought the facility for cash payments totalling $5.2 million. The purchase price includes the land and an existing $1.35-million reclamation bond.

And recent drilling results indicate resources may be increasing in the near future. Drilling has been focused on areas adjacent to and below the planned superpit as well as on finding new areas of mineralization. The program has been successful in that latter goal: a geophysical survey outlined substantial areas of high chargeability near surface and at depth.

The most recent results came from the Pit 3 area and the Oriole zone. In Pit 3, which will comprise the southernmost part of the superpit, hole 33 hit 65.2 metres grading 0.84% copper, 0.27 gram gold and 3.7 gram silver in the northeast wall. Hole 13 cut 27.4 metres grading 0.53% copper, 0.08 gram gold and 2.8 grams silver near surface, followed by 62.5 metres of 0.53% copper, 0.1 gram gold and 1.53 grams silver near the bottom of the superpit. And hole 28 returned 70 metres grading 0.84% copper, 0.31 gram gold and 5.49 grams silver in the lower wall and 69 metres of 0.42% copper, 0.13 gram gold and 2.29 grams silver toward the pit bottom.

The Oriole zone, which sits just southeast of Pit 3 and is currently outside of the planned superpit, is characterized by narrow, high-grade zones between late, barren dykes. Results have, as such, been inconsistent, but hole 17 recently hit 36.3 metres grading 2.1% copper and 22.7 grams silver.

The results were good enough to prompt Copper Mountain to expand the 2008 drilling program to 60,000 metres. A new resource estimate is planned by year-end.

Copper Mountain graduated to the main TSX board from the Venture exchange in September. The company’s share price has not fared well of late, falling to 50 in mid-October from a high of $2.50 in May. On news of the production decision, the stock lost 3 to close at 72. The company has 31.6 million shares issued.