Junior
The deal calls for Atna to make escalating payments totalling $750,000 to Phelps over five years. Also, the company must pay Chilean state-owned Enami $6 million and spend $2.5 million on the property during the five years.
Enami will retain a sliding-scale net smelter return royalty ranging from nil to 2% on any concentrate production and a sliding-scale operating margin royalty ranging from nil to 3.25% on cathode production. The sliding scale is based on the operating margin.
Atna plans to begin commercial production within five years, though the period may be extended by three years in return for a series of advance royalty payments totalling $600,000.
Atna will act as operator and is responsible for arranging for project financing through to commercial production.
Cerro Negro is 50 km northeast of the port city of Chanaral, at an elevation of 1,100 metres. A government-maintained gravel road connects the project to a paved highway 15 km to the southwest. Powerlines run adjacent to the property, and there is a potential water source about 10 km to the east.
The project is part of a 7-km-long belt of tightly clustered iron oxide copper-gold breccia pipes and associated manto deposits. High-grade copper has been mined from the area by artisan miners since the early 1900s and continues today, with a few miners producing a small tonnage of oxide ore grading 3-5% copper.
Exploration by previous operators, including Phelps Dodge, put the oxide mineral resource at about 190 million tonnes grading 0.46% copper. The estimate is based on 115 drill holes and extensive underground channel sampling.
By focusing exploration on already-identified higher-grade areas, Atna believes it can define an oxide resource of more than 40 million tonnes grading in excess of 0.8%. Such a resource would support a solvent extraction-electrowinning (SX-EW) plant capable of producing 25,000 tonnes of copper cathode annually, with potential to increase as additional reserves are proved up.
The company plans to collect samples from column-leach tests to determine metallurgical performance, followed by infill drilling to verify the continuity of the high-grade mineralization. Depending on the results, a feasibility study would follow.
Ultimately, Cerro Negro could become an SX-EW production centre for other oxide deposits in the area, including its Barreal Seco project, 30 km to the northeast.
Atna acquired Barreal Seco in June 2001 and has since conducted prefeasibility work, including metallurgical tests and more than 2,400 metres of drilling.
Based on 20,000 metres of drilling by
Atna envisages producing at least 10,000 tonnes per year over a minimum of 10 years using SX-EW. Capital costs are not expected to exceed $25 million.
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