Vancouver A few years back when the price of bullion was touching US$260 per oz, several junior explorers took the opportunity to pick up out-of-the-money gold projects with an eye that prices would soon improve. That move appears to have paid off and now with base metal prices touching near historic lows, newly minted Lumina Copper (LUM-V) is banking on a similar performance for copper.
Headed by Anthony Floyd and backed up by the likes of Ross Beaty (CEO of Pan American Silver) and Rick Rule (CEO of California-based Global Resource Investments), Lumina was formed in late May through the merger of CRS Copper Resources and capital pool company, First Trimark Ventures. A name change and a 10-for-1 share consolidation paved the way for the new company "to acquire large, defined deposits in mining-friendly countries, putting in place the assets and structure to profit from a cyclical copper market."
Privately-held CRS was formed in Oct. 2001. Led by Floyd and Beaty, the company quietly picked up the rights to the Casino, Redstone and Hushamu copper projects.
The Redstone property lies in the Nahanni mining district of the Northwest Territories and hosts the historic Coates deposit, which was discovered in the 1960’s. A classic stratabound "red-bed type" deposit, Coates displays continuity in both grade and thickness for over a 6 km strike length to depths of 2.4 km down-dip.
The copper-bearing beds are hosted by the Transition zone of the Coates Lake group, which unconformably overlies the Little Dal group, a sequence of continental clastics and carbonates. The property covers a broad syncline that has been thrust eastward along the Coates Lake fault, putting the Coates Lake group over Paleozoic strata.
Disseminated copper mineralization is disseminated throughout the Coates Lake group with the most significant occurrences lying in the eight copper-bearing beds of the Transition zone. The lowermost bed dubbed B1 marks the highest grades, while the B3 bed has the greatest thickness. The beds show distinct zonation with the copper content decreases up-section, both across each mineralized bed and across the Transition zone. There is also a lateral copper-iron zonation, with the iron-rich zones closer to the margins of the basin. Mineralization of the B1 bed comprises mainly chalcopyrite in the south and east areas, with increasing chalcocite-bornite content further to the northwest, towards the centre of the basin.
In Nov. 2002, an independent technical review gave the property an inferred resource of 33.6 million tonnes grading 3.92% copper ant 9 grams silver.
Lumina plans to launch a $750,000 drill program over the project later this year.
Casino and Hushamu await higher prices
Located in the west central Yukon some 300 km northwest of Whitehorse, the Casino property hosts it namesake porphyry copper-gold-molybdenum deposit. The property has undergone varying degrees of exploration since the 1960’s but the bulk of the work, including 68,465 metres of drilling in 1993-94 came at the hands of Vancouver based Pacific Sentinal Gold. Overall some $10 million has been spent in the ground, generating a measured and indicated resource of 323 million tonnes grading 0.28 gram gold and 0.26% copper in the sulphide zone, plus 103 million tonnes grading 0.32 gram gold and 0.35% copper in the supergene zone. Another 36 million tonnes of oxide material grades 0.32 gram gold and 0.36% copper. A separate gold oxide zone hosts 38 million tonnes averaging 0.57 gram gold and 0.07% copper using a 0.4 gram gold cut-off grade.
Moving over to the northern part of Northern Vancouver Island, the Hushamu copper-gold deposit, also known as the Expo property, lies in the Nanaimo mining division some 27 km from the Island Copper deposit, which entered production in the early 1970’s and closed in the mid-1990’s under the ownership of BHP Minerals, now part of BHP Billiton (BHP-N).
Over the years, $3.4 million has been spent on the Hushamu property, mostly during the early 1990’s by Jordex Resources and by BHP Minerals. Over 25,000 metres of drilling led to a measured and indicated resource of 230.9 million tonnes grading 0.28% copper and 0.31 gram gold, using a 0.2% copper cut off grade. The property also hosts an inferred resource of 52.8 million tonnes grading 0.28% copper and 0.38 gram gold.
With significantly lower grades, the Casino and Hushamu properties will be put on the shelf until high copper-gold prices are foreseen.
El Galeno
With a solid framework of projects in place, the newly structure junior wasted no time in adding to its property portfolio. Earlier this month, Lumina inked a deal to pick up the El Galeno copper-gold property in northern Peru. Located in the Cajamarca area some 600 km by road north of Lima, the El Galeno porphyry copper-gold deposit, hosts a historical inferred mineral resource of 486 million tonnes grading 0.57% copper and 0.14 grams gold per tonne, using a 0.4% copper cut-off grade. This represents some 6.1 billion lbs. of contained copper and 2.2 million oz of gold.
"This acquisition places us firmly on the road to establishing Lumina as the most leveraged copper investment available," says Floyd. "In fact, this acquisition will boost our Inferred Resources to 9.32 billion lbs. copper and 2.8 million oz. of gold while Measured and Indicated Resources will remain at 4.4 billion lbs. of copper and 7.3 million oz. of gold.”
Copper mineralization was first discovered on the property back in 1993. Newmont Peru, a subsidiary of Newmont Mining (NEM-N) and North Compaia Minera S.A. (North) punched 21 diamond drill holes and 30 reverse circulation drill holes into the property cutting porphyry copper mineralization in both the lower Cretaceous sediments and dacitic intrusives.
Lumina can purchase the property from an arms-length private Peruvian company by paying US$2 million over 4 years. The first year payments total US$180,000 with the remaining US$1.82 million subject to staged reductions ranging from 50-to-20% if the average copper price is less than US$0.65-to-US$1 per lb.
In addition, 50% of the final payment due in the first year (US$100,000), plus all the rest of the payments, can be made in Lumina shares and the final balloon payment of US$1.12 million can be postponed for up to three years by paying US$100,000 per year, half of which is applied to the delayed payment. The vendor also receives US$250,000 on completion of a positive feasibility study; a further US$250,000 should mine construction begin and a final US$1.3 million one year after commercial production has commenced.
Lumina currently has $3.3 million in working capital, giving the junior enough cash to met all the acquisition payments due in 2003 and 2004 and pay for the drill program on the Redstone property.
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