Lower production hurts Quadra

Second quarter production was lower than expected for Vancouver-based copper miner Quadra Mining (QUA-T), and the company’s shares fell as a result.

Results from its Robinson Mine and Carlota Mine missed the company’s own guidance and as a result guidance for 2009 had to be revised downwards.

“Both of our operations have encountered some challenges this past quarter and while disappointing, they are not altogether atypical,” Paul Blythe, Quadra’s president and chief executive said in a statement.

Total production for the quarter came in at 29.7 million lbs of copper and 18,031 oz. of gold, and Quadra says production for year will be down by roughly 7%.

The bulk of second quarter production came from the Robinson Mine in Ely Nevada.

Robinson produced 22.9 million lbs of copper and 18,031 oz. of gold. Numbers that were off of the company’s expectations due to concerns over the stability of a pit wall.

Those concerns raised by the Mine Safety and Health Administration (MSHA), the Federal enforcement agency responsible for safety and health in US mines, and as a result Quadra couldn’t access the hypogene ore it uses to blend with supergene ore from the another pit. The combination of the two ores has given the company more consistent production and improved metallurgical performance in the past.

Quadra says it has come to an agreement with MSHA where by it will make changes to the pit design and increases to the monitoring and fence protection.

It says mining at the hypogene pit will start up again in the third quarter but production guidance for copper has been reduced slightly with the mine now expected to produce approximately 130 million lbs of copper. Gold production guidance, however, remains unchanged at 100,000 oz. for the year.

Over at its Carlota Mine in Globe-Miami, Arizona, production came in at 6.8 million lbs of copper for the second quarter – again missing its own targets.

Another pit wall issue was to blame. Additional work was required on a pit wall above the Pinto Creek Diversion and that delayed access to higher grade ore. It expects to have access to the higher grade ore in the third and fourth quarter.

In addition leaching rates were also lower than planned as irrigation rates were 20% lower than anticipated because of the segregation of fines during the stacking procedures.

The situation means a shortfall of 1 million tonnes of higher grade ore for the leach pad.

Quadra says it has revised ore stacking procedures and is adding equipment to try and improve flow rates through the upper leach pad surface.

“Percolation challenges due to the segregation of fines are not unusual and can be resolved by developing different stacking procedures. The lower solution flow rates will increase leach times proportionally. On the positive side, evaluation work to date on material that has been leached continues to confirm that the recoveries used in the feasibility study are appropriate and should be achieved,” Blythe said.

At the company’s third copper project, Franke in Chile’s Region II, the news was somewhat better, although not unmarred by difficulties.

Production at the mine was delayed by pond construction issues and a structural design issue with the primary crusher feed system. But

Quadra reports that mining has begun and the first cathode production is expected in by the third quarter.

Quadra says second quarter financial results will be announced on August 13th.

In Toronto on July 13, the day the news was released, Quadra shares fell 7% or 56¢ to $7.45 on 1.6 million shares traded.