QUERY — Yuma swimming against tide

The Northern Miner has often reported on Yuma Copper (YUM-V), but recently it has been dropped from your weekly stock price listing. I hear that it was delisted. I did not see any mention of this in your paper. Did I miss the story, or was it too insignificant to report?

John Acord

Milan, Mo.

Yuma Copper is facing problems with creditors and is trying to close a US$40-million debt-financing deal with the Generale Bank of Belgium. The company remains at an impasse regarding a dispute over the size of the Tuina copper project in northern Chile, 60 km southeast of Chuquicamata.

While the company has not been delisted, the B.C. Securities Commission implemented a stop-trading order against Yuma’s issues on Feb. 3, 1998, citing the company’s failure to file financial statements. Yuma says it can’t submit its financial statements until it reaches a settlement with its creditors and gets Price Waterhouse to sign-off on the completed audit.

The company says the closure of its two copper plants in Chile, Dona Ada and Sierra Miranda, dried up the company’s cash flow to the point that it couldn’t make debt payments to its creditors. The Dona Ada and Sierra Miranda plants produced copper precipitate and pregnant leach solutions, providing Yuma with an interim cash flow during the construction of the Tuina solvent-extraction electrowinning (SX-EW) plant. High production costs and low copper prices forced Yuma to shut them down.

In November 1997, Yuma made a preliminary agreement with Generale Bank of Belgium to provide a US$40-million debt financing to be put towards the development of the 12,000-tonne-per-year Tuina plant.

The bank hired Belgium-based Bureau of Geological Consultancy (BUGECO) to perform an independent evaluation of the bankable feasibility study on Tuina, which had been prepared by Bateman Engineering and Mintec.

Preliminary reports released by BUGECO in December indicated that ore reserves were less than had been calculated in the feasibility study, and metallurgical recoveries were also lower than those calculated by Bateman.

Based on BUGECO’s numbers, the capital development and production costs could not sustain a 12,000-tonne-per-year processing plant.

Proven and probable reserves were pegged by Bateman Engineering at 9.4 million tonnes grading 1.12% copper. An additional 3.5 million tonnes of material of similar grade was classified as inferred. Copper recovery from oxide material was estimated at 85%.

Intensive evaluation and discussions between Yuma, Bateman, Mintec and BUGECO are ongoing, but so far they have failed to resolve their differences. Several proposals have been tendered to break the impasse, including construction of a smaller SX-EW plant or additional drilling and metallurgical testing to attempt to bolster the original estimates made by Bateman and Mintec.

Please address all queries to: Editor, The Northern Miner, 1450 Don Mills Rd., Don Mills, Ontario, M3B 2X7.