Zaruma stops to look for money

Zaruma Resources‘ (ZMR-T) has halted the development of its Luz del Cobre copper project in Mexico for lack of funds.

The project which lies in the northwestern state of Sonora was slated to begin producing copper cathode in February of next year but will now be put on hold until the company can raise another US$15 million.

It says it is currently in talks with lenders but that the outcome of such discussions is “not assured.”

Luz del Cobre is slated to cost US$37 million to build, but only US$22 million has been paid to contractors and suppliers. That amount came largely from financing provided by the privately held Glencore International.

Open pit mining started at the project in September of this year and ore was being stockpiled with the intent of having it crushed and put on the leach pad by the end of November.

Zaruma says nearly all the equipment to finish the electricity generating plant and the copper SX-EW production plant has been ordered, received, or is ready for shipment.

While copper’s current low prices and the tight credit market are, no doubt, making financing more diffiucult, the comapny declared itself a believer in the strong supply and demand fundamentals for the metal, and that its price will rise.

And it isn’t letting the construction halt get in the way of its exploration program.

It says drilling in the Sapo-Carrizo area is continuing with 1,400 metres of the planned 2,000 metres already drilled. Assays are pending.

While news of the construction suspension was released after the market closed on Friday, the company finished the day trading for 7.5 on a volume of 183,000 shares.