U.S. REPORT Arimetco planning to increase Yerington mine’s copper

Ron Shipes, president of Arizona-based Arimetco International (TSE), recently revealed the latest stage in his plan to build Arimetco into a significant player in the North American copper industry. With four properties containing known reserves in its portfolio, Arimetco is examining the feasibility of expanding its Yerington project in Nevada to produce 250,000 lb. cathode copper daily.

Set up two years ago to acquire oxide copper deposits that are amenable to heap leaching, Arimetco is already producing close to 20,000 lb. copper daily at Yerington from a stockpile containing about 30 million tons of oxide material grading 0.25% copper.

The Yerington operation accounted for almost all of the six million pounds of copper produced by Arimetco in 1990 when the company reported a loss of US$1.8 million. The balance came from the company’s Johnson mine in Arizona.

Shipes says it should take about 18 months before crews can begin mining a Yerington sulphide deposit containing 50 million lb. porphyry copper ore grading 0.5% copper, 0.01% molybdenum, 0.003 oz. gold and 0.1 oz. silver per ton.

“Negotiations with Nevada state and local governments for the dewatering process and permitting of operations will commence immediately,” said Shipes.

He expects the capital cost, including contingencies of developing an open pit mine, to be around $60 million.

Project engineering calls for a 25,000-ton-per-day sulphide concentrator, a fluid bed reactor capable of roasting 350 tons of copper daily and a 400-ton-per-day sulphuric acid plant.

Under Arimetco’s plan, the plant is expected to produce 50 oz. gold and 1,400 oz. silver and 5,600 lb. molybdenum concentrates daily.

Investor interest in Arimetco has put the company among the most active issues on The Toronto Stock Exchange recently as the shares have climbed to a high of $4.50. A month ago, the 17.5 million issued shares were trading in the $2.70 range.

Much of the share activity was sparked by Arimetco’s 5-year marketing deal with Billiton Metals of New York. It has paved the way for the Yerington expansion which should require about US$40 million in what Shipes called commercial financing, with the balance coming from a $7.8-million public offering of shares and warrants. “We do not anticipate any further equity offerings,” said Shipes, who expects production costs to be in the US50 cents-per-lb. range.

A 48-year-old metallurgist, Shipes is a former chief executive of Papua New Guinea’s gold-copper producer Ok Tedi Mining. He also helped to found American Pacific Mining which brought the former El Mochito zinc-lead mine in Honduras into production before American Pacific was acquired by Breakwater Resources (TSE).

Future plans include studying the feasibility of “cycling in” a high-grade core of 110 million tons of material from Arimetco’s Ann Mason deposit which lies contiguous to the Yerington pit.

According to Arimetco, Ann Mason hosts three billion lb. of recoverable copper within 487 million tons of grade 0.4% copper.

Meanwhile, Toronto-based Holcorp Gold Mines (CDN) has agreed to purchase all the shares of Arimetco’s wholly owned subsidiary TSC Enterprises for US$3.75 million. TSC’s chief asset is the Emerald Isle copper property in Arizona which, according to an Arimetco prospectus, hosts 1.8 million tons grading 0.72% of probable reserves.

Commercial production is expected to begin this fall, after the construction of an 8,000-lb.-per-day solvent extraction and electrowinning plant is completed.

Holcorp says it has paid out US$100,000 so far and it plans to make an additional US$1.9 million in cash payments over the next six months with the balance to come within three years from production.

The company is also planning to raise US$2.25 million by completing a private placement to “sophisticated investors” of three million special warrants priced at 75 cents each.