Augusta advances Rosemont copper project (October 23, 2008)

Augusta Resource Corp. (AZC-N, AZC-X) has improved metallurgy and discovered a new mixed oxide-sulfide zone at its Rosemont open-pit copper-molybdenum-silver project in Southern Arizona.

In the latest testing, recovery for molybdenum improved the most to 70-75%, up from 56% in the 2007 bankable feasibility study. Silver recovery was 80-82% up from 78% and copper was 84-86% from 84%.

The purpose of the testing was to optimize grades as well as produce concentrate samples for marketing and to produce tailings samples to be used in the final engineering design. The company says these results, which looked at the first three years of mining of the 18.2-year project, were significant financially. According to the feasibility study, the project has a payback period of 3 years so the improved recoveries mean more cash flow. Augusta didn’t say by how much those numbers will be in the updated bankable feasibility study coming out at the end of the year.

Augusta has also improved its measured and indicated resource estimate, if only slightly, by 5%. Drilling has added 386 million more lbs. copper equivalent to the measured and indicated category, while 286 million lbs. copper equivalent has been added to the inferred category.

The drilling gave Augusta a better understanding of the Rosemont deposit. The company drilled 20 holes and sampled 10 previously unsampled geotechnical holes from 2006 and ended up identifying a zone of partial oxidation consisting of mixed secondary oxides, secondary sulfides and primary sulfides. The area is now known as the “mixed” zone, which occurs along a structural zone in the northwest deposit area, and has been separated into its own category in the resource estimate.

Measured and indicated resources for sulfides stand at 7.94 billion lbs. copper-equivalent, 458 million lbs. copper equivalent for mixed mineralization and 417 million lbs. copper equivalent for oxide ore.

Under the inferred category, resources stand at 1.88 billion lbs. copper equivalent for sulfide mineralization, 139 million lbs. for mixed and 147 million lbs. for oxide material.

Augusta is currently working on an environmental impact study for Rosemont, which, when in production, will operate at a capacity of 75,000 tonnes per day, producing 220 million lbs. copper, 4.5 million lbs. molybdenum, 2.7 million oz. silver and 15,000 oz. gold per year. An additional heap leach plant will enable the company to produce another 14 million lbs. copper cathode per year for the first eight years of production. Augusta hopes to bring the $725-million project into production by 2011.