Curis an innovator and educator at Florence

When it comes to the mining industry’s grand stage, companies are often required to play different roles. The tale is much the same for Hunter Dickinson-backed Curis Resources (CUV-T) in its gambit to develop its Florence in-situ copper project in Pinal County, Ariz. The company is playing the part of an educator, innovator and developer to lock down permitting and zoning needed to meet a commercial production target in late 2014. 

Perhaps the most important role Curis has played so far has been as an educator. Roughly half of the company’s indicated oxide resources, totalling 390 million tonnes grading 0.331% copper, lies on private land requiring municipal zoning, which means Curis needs to win support from the nearby town of Florence. 

Due to the nature of in-situ recovery — involving an injection of a weak acid mixture into the ground to create a recoverable, copper-rich extract — the company has had to address environmental and -scientific concerns surrounding the relatively new technology in the copper industry. 

“The primary commentary or concern we hear about is water,” president and CEO Michael -McPhie explains during an interview at Curis’ head offices in Vancouver. “One of the big things we deal with is perception and understanding. Somebody understands you’re injecting a solution into the ground to dissolve copper and to bring it up — what they want to absolutely confident of is the fact that what we’re doing does not pose a risk to the water supply.”

Curis has spent the last year locked in a ground-level, public-relations battle with a group of U.S.-based land speculators who have investments surrounding the Florence project. The real estate group has made it a priority to impede Curis’ development, targeting town zoning regulations as leverage.

“What happened there was, this other parcel of land — which used to be owned by VHP Copper — was purchased by a land speculating group out of San Diego,” McPhie comments. “They acquired the land about eight months after us, and they’re controlled by a group called Southwest Value Partners, as well as a hedge fund out of New York called GTIS Partners. What they’ve done, unfortunately, is use their funding and public relations consultants to confuse the issue with people and create a sense of fear about what the project’s about. What they do is buy land, hold it for a period of time and sell it to somebody else. We’ve tried to speak with them a number of times, but they’ve been pretty much unwilling to engage in any dialogue.”

In response Curis has redoubled efforts at its community relations offices in Florence, and works closely with state and county regulators to assure full transparency. The project has vocal backing at the state level, with outspoken support from Governor Jan Brewer, who has identified the mining industry as a key measure in restoring Arizona’s struggling economy, as well as State Land Commissioner Maria Baier.

“If you start at the macro level from the governor to the agencies, counties and all the way down, we have tremendous support for the project,” McPhie says. “We’re going through the final amendments to the operating permits right now. The governor has been a big supporter because this is one of those types of ‘legacy projects’ that can really be a driver in the state economy for twenty to twenty-five years.”

Support for the project at the state level shouldn’t be surprising. Arizona’s economy heavily relied on the real estate industry when the bottom fell out of the sub-prime mortgage market in 2007. This shocked the entire state — but towns like Florence and areas like Pinal County suffered more acutely than most.      

According to an economic impact study released by Arizona State University (ASU) in late April, Florence has a 20.3% unemployment rate. Government jobs account for 75% of total employment in the town, with private employment per capita falling 82% below the national and state averages. By those numbers Florence’s employment per capita would have to increase five times over to equal Arizona’s state average.

“It seemed like the community was directing its future based solely on the housing industry,” McPhie explains. “What most economists have said is that you need employment centres to support housing, and that’s what we think we offer here. What we found was basically two-thirds of our workforce was going to come from Pinal County — so, the immediate communities around us.”

According to the economic study conducted by the L. William Seidman Research Institute at ASU, Curis’ in-situ copper operation could generate US$2.2 billion for the state of Arizona, with US$1.1 billion staying within Pinal County. The project is expected to sustain 681 jobs annually in the state over 28 years, and personal income is estimated to rise by US$709 million in the county. 

Curis is playing the role of an innovator during the process, working closely with in-situ specialists to design the most efficient and safe way to extract copper for the project. Where most mining-development companies look at industrial economies of scale and exploration to drive value in commercial production, Curis has a research and development growth model in its toolbox.

“Working with really cutting-edge, in-situ scientists at the University of Arizona represents such an opportunity,” McPhie explains. “We’ve always had the stance that we can improve the recoveries as we refine the project.  That’s the real value, it’s really a driver. We’re becoming one of the top knowledge bases in the world for this type of mineral extraction. There are patents involved in the work that we’re doing down there.”

In a bid to win support from the town council and gain land-zoning permits, Curis has designed a first-phase plan worth US$40 million. The first phase will serve as a pilot run for a major build-out tagged under an October 2010 feasibility study at US$237.8 million.

“Our first several years of production will be on the state land,” McPhie comments. “What we’ve done is focus the first stage of development on land where we have full control and authorization to operate today. Then over time we’ll move into the private land. Since the operation is basically underground, we won’t require any further surface infrastructure.”

Curis reached an agreement with Red Kite Mine Finance on key terms for a US$40-million secured loan facility in early April. The agreement also contains an offtake element, under which Curis will supply up to 30% of its copper cathode production at Florence to Red Kite at market prices. 

The loan marks the beginning of an in-situ pilot stage that will see the company sink a 24-well copper extraction field, and build a solvent extraction and electrowinning facility.  

According to McPhie, one of the most intriguing aspects of the project is the idea that the company can operate in the region for a 20-year period without leaving a lingering footprint.

“We’re going to be having farming operations while we’re in production — fairly extensive, commercial-scale farming operations. And we’re also going to have a lot of water we have that we can recycle and use for agricultural purposes,” McPhie says. “When you finish the extraction process you rinse the g
round, remove the wells and cover it all up. Following that you can use the land for multiple purposes, whether that is parks, housing or more agriculture.”

Curis’ theory eliminates concerns such as revegetating tailings dams or closing out waste-rock piles. The operation addresses environmental hurdles associated with large-scale mine operations, assuming the science is strong. 

Political processes have taken a bite out of Curis’ share price over the past 52 weeks, with year-on-year share values declining by 70% from a high of $2.80 to a presstime close of 85¢, on an average trade volume of 37,550 units per day. 

Prices shot up as high as $1.20 per share in February when Curis received a commercial-scale air quality permit from the Pinal County Air Quality Control District, demonstrating the project’s sensitivity to regional permit proceedings. Curis expects to receive the remainder of its amended operating permits by September, with first-phase construction starting shortly thereafter. 

“From our perspective, when we look at the town discussion, we’re trying to get the first phase up and running so people can see that the project is safe, see how it works and have that open and transparent dialogue,” McPhie concludes. “We’ll gain the confidence with folks in regards to the science. By then, hopefully local zoning issues are easily resolved.”