Summo receives positive study for Lisbon Valley

With a bankable feasibility study in hand, Summo Minerals (SMA-T) plans to raise US$57 million to build a mine at its Lisbon Valley copper project in southeastern Utah.

The property is fully permitted with the state, the U.S. Bureau of Land Management and other government agencies. The company has successfully defended these permits against court challenges launched by environmental groups.

A recent feasibility study places reserves at 36.7 million tons grading 0.51% copper, containing 377 million lbs. copper. The stripping ratio will be 2.25:1 waste-to-ore over the life of the operation. Cash operating costs are projected to be US45 per lb., with total costs of US73 per lb., including initial and ongoing capital, closure costs and other non-cash items.

At full production, the solvent extraction-electrowinning operation would produce 40 million lbs. copper annually over a mine life of more than eight years.

The project is highly leveraged to the copper price. At a price of US85 per lb., the internal rate of return is a meager 7%. It rises to a 28% rate of return at a price of US95 per lb., while at US$1.05 per lb., the rate climbs to a robust 47%. It also has US$7.7 million in tax losses that can be applied against future income.

The recent study includes fixed-price contracts for construction of the plant and surface facilities. These contracts represent 80% of the initial capital required for construction, limiting the project’s exposure to cost over-runs. Contract miners will be used for day-to-day operations.

Summo is in discussions with several banks and construction is expected to begin once project financing is arranged. Mining could begin within 12 months.