Apoquindo finds US partner for Chilean copper project (April 22, 2009)

ancouver — A joint-venture agreement with a private partner ready to spend almost $11 million is set to move Apoquindo Minerals’ (AQM-V) namesake project ahead at a rapid-fire pace.

Privately held, U.S.-based Minera SA has signed on to earn a 50% interest in the Apoquindo copper oxide project, which is in northern Chile’s Region II. To earn its half of the project, Minera has to spend $10.8 million on exploration within four years. It could then choose to boost its interest to 65% by completing a feasibility study costing at least $5 million.

According to Jim Komadina, Minera’s president and CEO, that is exactly what the new partner wants to do, and as quickly as possible.

“Our plan is to have the feasibility study done by the end of 2009 and make a production decision shortly after that,” he says. “We can meet that schedule.”

Minera could then earn another 10% of the project by directly financing or arranging financing for the joint venture through to the start of production.

The Apoquindo project consists of two deposits — Elenita and Madrugador — that sit 18 km apart in the Antofagasta coastal range. In September, an updated estimate pegged resources at 31.9 million measured and indicated tonnes grading 0.8% copper plus 6.2 million inferred tonnes averaging 0.7% copper. The copper is hosted in oxide mineralization contained in manto-style deposits.

Komadina says Minera will have no trouble spending its $10.8-million commitment on drilling to upgrade and expand resources, metallurgical testing, and mine planning.

The partners are looking into setting up a crush-and-leach operation to produce pregnant leach solution (PLS) that they would process at another company’s solvent extraction-electrowinning (SX-EW) plant.

“We know there is excess SX-EW capacity nearby,” Komadina says. “We have visited with operations in the region that could handle 15,000 to 20,000 tonnes per year of copper metal in PLS. That would be one good way of getting into production while we judge the district potential.”

Komadina says he doesn’t want to prejudge the results of the feasibility study, which will recommend the best path to production, but added that if the study did recommend shipping PLS to another facility the partners could be in production by the third quarter of 2010.

The partnership brings together some highly experienced personnel. Apoquindo’s chairman is Juan Villarzu, who served as CEO of Chile’s state mining company Codelco for nine years and, in that time, grew its market capitalization to $15 billion from $3 billion. Villarzu is also a former senior economist to the World Bank.

Komadina previously worked as senior vice-president of Gold Fields Exploration and CEO of AngloGold North America. Minera’s boardroom table also has a seat for Gonzalo Sanchez de Lozada, who served two terms as the 61st president of Bolivia. Prior to holding public office, Lozada founded Iris Mines & Metals, now the second-largest private mining company in Bolivia.

Minera also agreed to invest $2 million in Apoquindo the company through a private placement of 5 million units at 40¢ apiece. Each unit comprises one share and half a warrant. The financing will leave Minera with 12.4% of Apoquindo’s outstanding shares, on a fully diluted basis.

And aside from the obvious advantage of a well-financed partner for its most advanced project, the deal gives Apoquindo the added benefit of being freed, with some extra cash in the bank, to return to work in Peru.

The company holds the Pachagon copper play in La Libertad, in northwestern Peru, where it managed to consolidate a project that had been divided among several owners until Apoquindo came along. Work at Pachagon had been on hold to allow Apoquindo to focus on its namesake venture, but the company’s geologists are now keen to return.

Apoquindo’s share price gained 7¢ on news of the joint venture to close at 57¢. The company has a 52-week trading range of 22¢-$1.45 and 34 million shares outstanding.