Copiapo, Chile — The old adage of “buy low, sell high” was not wasted on
The company’s focus on copper, in stable, proven areas of the world, was at a time when the metal was near the bottom of a price cycle. Yet Lumina launched its aggressive acquisition program, securing 10 large copper projects, at exploration to advanced stages, in Argentina, Canada, Chile and Peru, and did so at low cost and with little or no work commitments. With the metal out of vogue, little attention was initially paid to the company and its growing portfolio of mineral projects.
In reviewing the company’s start-up, Lumina Chairman Ross Beaty stated: “In 2003 when we began the company, we wanted Lumina to be an option on higher copper prices. We acquired all these properties very cheaply, with no holding costs. We acquired 100% interests in nine out of 10 cases and gained very, very large resources with leverage to copper prices.”
The company’s premier project, Regalito in northern Chile, exemplifies management’s strategy by its low acquisition cost. In late-2003, Lumina entered into an option to acquire 100% of the project from a Chilean group for payments of US$900,000 over eight years and maintenance costs. Additional cash payments are triggered if copper prices remain above US$1 per lb. for a calendar year. A variable 1-3% net smelter return will be applied to production, depending on the copper price.
With the projects secured, Lumina looked at adding value to its projects by initiating work programs and evaluating possible development options.
Regalito has seen previous exploration programs from the late-1980s to 2000 by:
The most advanced work was done by BHP Billiton, compiling an unclassified resource from a program of 65 drill holes. BHP outlined about 200 million tonnes grading 0.5% copper (using a 0.3% copper cutoff grade), which fell below its economic threshold. That resource also pre-dated National Instrument 43-101.
Lumina’s exploration crew recognized Regalito’s potential and management threw its support behind the idea, allocating a significant drill budget for 2004. In a 10-month period, 114 holes totalling over 32,000 metres were completed, defining a copper-mineralized supergene enrichment zone extending about 1.5 km east-west and 2 km north-south that remained open to the southwest. Additionally, extensive mapping and metallurgical test programs were initiated.
What a difference a year makes. The result: Lumina combined its drill results with previous work at Regalito and in early-2005 outlined a NI 43-101-compliant, measured and indicated resource of 628 million tonnes grading 0.43% copper plus an inferred resource of 131 million tonnes at 0.41% copper. Lumina used a 0.25% copper cut off grade and US$1-per-lb. price. The estimate, audited by consulting firm AMEC, encompasses both near-surface oxide and the supergene copper mineralization.
Regalito now ranks as one of the larger leachable copper deposits in Chile, containing several billion pounds of the metal.
Drilling has indicated a vertically extensive chalcocite blanket, or secondary sulphides, beneath the oxide cap. The supergene enrichment zone has been intersected over widths in excess of 350 metres in sections of the deposit. The deeper, primary sulphides (consisting of chalcopyrite, bornite and pyrite) have gone largely untested.
Bottle-roll metallurgical testing of both oxide and secondary sulphide copper mineralization recovered from drilling confirmed earlier results that had demonstrated high leachability. Average total copper leachability, based on a 35-day bottle-roll test, was 88% for oxide ore and 73% for sulphide. The oxide is showing a very quick leach cycle with low acid consumption, with some acid generation caused as a result of the presence of the water-soluble copper sulphate mineral chalcanthite. Sulphide ore leaching is also showing above-average recoveries.
When asked about initial Regalito sulphide leach results, SGS Lakefield hydrometallurgist Reinaldo Barrera remarked that “73% for sulphide is very good; this ore is very nice,” when compared to the average bioleach recoveries in the real world of around 60%.
The next stage of metallurgical testing is currently being undertaken by SGS Lakefield at its Santiago lab, where bulk-column leach testing of a composite of copper-mineralized material from Regalito is under way. The test material was extracted from HQ core in 8 holes totalling 1,830 metres. Testing is expected to run about one year with intermediate results anticipated in mid-2005. Data from the leach-testing will help determine a number of engineering factors from optimum crush size to acid consumption, and will form the basis of a prefeasibility study on a commercial-scale copper leaching operation at Regalito.
Altitude, which can depress leach rates and recoveries, is not expected to be a major factor in a planned leaching facility at the mine site. Although the deposit is located at an elevation of 4,200 to 4,650 metres above sea level, prospective leach pads have been scoped out down slope at around the 3,000-metre level.
The Regalito deposit enjoys the benefit of good regional infrastructure. Situated about 115 km southeast of Copiapo, a major mining centre, there is excellent road access to the project and a nearby power grid. Chilean state-owned
Partial erosion of the deposit has essentially pre-stripped a large portion of the upper-level oxide zone, leaving the supergene enrichment zone near surface, amenable to open pit mining. The deposit also benefits from favourable geometry; a preliminary stripping ratio was estimated at less than 0.5-to-1 on the existing defined resource, aiding the economics of any future mining. Additionally, topography is a factor in the project. A rapid elevation drop from the deposit to a possible leach facility could see ore transported by a gravity conveyor system over several kilometres.
Regalito is an Andean-type porphyry copper deposit located at the southern end of the Maricunga District, which also hosts the Refugio and Cerro Casale deposits. Mineralization is associated with a cluster of monzogranites and dacitic porphyry intrusions along with associated hydrothermal-contact breccias. Moderate to strong phyllic alteration dominates the intrusions, consisting mainly of silicification with sericite. Pods of strong to intense potassic alteration occur within the dacite porphyry and are typically more common at depth. The dacites intrude the Paleozoic monzogranites and are associated with the regional, northeast-striking Caserones fault. The predominant copper mineral is chalcocite in the supergene enrichment zone. Mineralization in the hypogene zone consists of pyrite and chalcopyrite along with minor bornite and molybdenite.
The company’s ongoing strategy is to advance its copper projects, adding value and proving up resources, and then either divest them at a profit or joint venture them to an operator.
In early February 2005, Lumina Copper announced its plans for reorganization, splitting into four separate public companies. The move is aimed at both maximizing the market value of the copper projects in the company’s portfolio, and creating a simpler ownership structure that will allow easier financing or a possible sale.
The proposed arrangement will see current Lumina shareholders receive one share each of three new
companies for each present Lumina share held, in addition to their Lumina shares.
Following the proposed reorganization, the four companies will be: Regalito Copper, the renamed Lumina Copper entity, holding the advanced stage Regalito project; Northern Peru Copper, which will hold the Galeno and Pashpap copper projects in Peru; Continental Copper, which will own and manage the two other Chilean projects, Vizcachitas and Relincho; and Lumina Resources, which will hold the two Argentinean copper projects, San Jorge and Taca Taca, and three Canadian projects: Redstone, Hushamu and Casino.
Investors appear to be taking notice, and like Lumina’s plan. The company has seen its shares rally from the $6 level to a recent high of more than $9 per share, resulting in a market capitalization of over $150 million based on the 17.7 million shares outstanding.
Be the first to comment on "Lumina Copper sees Regalito as its shining star"