BASE METALS SPECIAL — AMT seeks to develop Arizona copper play

An agreement with copper giant BHP Minerals has AMT International Mining (AAI-T) moving ahead with development of a mining project in the heart of Arizona’s copper district.

The junior can earn up to a 75% interest in the Copper Creek property, 45 miles northeast of Tucson and 12 miles east of BHP’s San Manuel smelter complex.

The property includes 481 acres of patented claims and 1,200 acres in unpatented claims. AMT holds a 100% interest on another 699 acres in claims to the west of the BHP joint venture, as well as surface rights to a 780-acre ranch.

AMT acquired the option on Copper Creek from Magma Copper (now part of BHP’s copper group) in July 1994 and can earn an undivided 50% working interest by spending US$3 million on exploration and delivering a feasibility study by February 1998.

The company has a year in which to purchase either an additional 25% working interest for US$5 million or 25% of the net present value of the minable ore, which ever is greater.

As part of the deal, BHP has the right of first refusal on the sale of any part of AMT’s interest and on the processing of any concentrates.

Also, AMT has entered into an agreement with Phelps Dodge (PD-N) for lands surrounding the Copper Creek property. By spending US$3.5 million over the next four years, the company can earn a 51% interest in 1,100 acres of patented land that is contiguous with the BHP joint venture.

The Copper Creek property contains about 200 breccia pipes, 15% of which are mineralized, says Glen Zinn, AMT’s chief operating officer. Many of these were previously mined for copper and molybdenum.

Along with a thorough remapping of the district, Zinn says the company is engaged in three programs on the property. The first involves exploring for shallow sulphide mineralization (to a depth of 1,500 ft. below the surface).

In addition, the company is looking to increase leachable resources, while the third program involves exploring for a possible porphyry system at depth.

Four rigs are on site, with a fifth scheduled to arrive in July. AMT plans to carry out a minimum of 84,000 ft. of core and 15,000 ft. of

reverse-circulation drilling. To date, the company has drilled more than 26 holes.

Results from the first five mineralized angle holes from the Childs-Aldwinkle pipe show an average copper grade of 1.95%, which is 30% higher than the previous estimate of 1.5% reported by Kilborn Engineering.

The improved grade has allowed AMT to revise its resource estimate for the pipe to about 6 million tons. Mineralization extends to 1,500 ft. below the surface and remains open at depth and to the northwest.

Highlights of drilling include hole 28+4, which intercepted 128 ft. of 1.87% copper and 0.04% moly, plus significant gold and silver values, and hole 32+4, which hit 244 ft. grading 1.51% copper and 0.03% moly. Hole 38+7 hit 114 ft. of 2.42% copper and 0.02% moly, while hole 40+7 hit 63 ft. grading 3.59% copper 0.07% moly.

AMT plans to release more drill results at its annual meeting in Toronto in late June.

Other pipes prospective for sulphide mineralization include the Old Reliable, Railroad, White Bear and NE6/NE10. The total shallow sulphide resource for the property is estimated at 22 million tons grading 1.67% copper.

The most promising shallow leachable deposit on the property is the Old Reliable breccia pipe, which contains oxide minerals and chalcocite.

Previously, it produced 11.7 million lb. of copper, from underground mining and in situ leaching.

Previously published reports indicate the Old Reliable contains 4.2 million tons grading 0.53% copper.

Additional exploration and drilling indicate potential for outlining further leachable resources at 10 other breccia pipes, including the White Bear, Railroad and B24 pipes.

Drilling in the early 1960s identified a deep sulphide resource, the American Eagle deposit, which lies 1,600-2,200 ft. below the surface.

More than 37 holes have been drilled into the deep deposit. An estimate of the resource indicates that almost 77 million tons of material grading 0.80% copper exists at the American Eagle.

Zinn believes the number of mineralized breccia pipes points to a large porphyry system at depth, which may include the American Eagle.

The Copper Creek project will be developed in stages. The first efforts will be directed toward gaining access to the shallow material, to be achieved by using underground methods (and possibly open-pit methods for the Old Reliable). Attention will then be directed to gaining access to the deeper mineralization.

Preproduction capital costs for the project are estimated at US$35 million; operating costs, at US$16 per ton, or 59 cents per lb. of copper.

“With the new drill results, we are looking to keep our cash costs at 50 cents per lb. or below,” Zinn adds.

AMT began trading on the Toronto Exchange in March, having since raised a total of $9.5 million through two public offerings.