Copper Mountain’s mine development on track

Vancouver – Copper Mountain Mining (CUM-T) is getting close to living up to its name – development of the Copper Mountain mine in southeast British Columbia is on time and on budget and the company plans to start mining by mid-2011.

Copper Mountain is building a mine to tap into the open-pittable porphyry deposit known as Similco, which hosts reserves totalling 211 million proven and probable tonnes grading 0.36% copper for 1.7 contained lbs. A mill will churn through 35,000 tonnes of ore daily to produce 83 million lbs. copper annually over an 18-year mine life, with gold and silver credits.

The deposit, 15 km southwest of Princeton, lies around and underneath three historic open pits that will grow into one super pit over the next two decades.

The concrete foundations for the mill buildings are almost complete and Copper Mountain expects to start erecting steel by the end of March. To date the company has incurred a total of $285 million in spent and committed expenditures, more than half of the expected $438-million capital cost for the project.

Half of the mining fleet will be on site by the middle of the year, which will allow Copper Mountain to start preproduction mining. The life-of-mine average strip ratio is just 1.8 to 1.

In mid-2009 Mitsubishi Materials signed on to buy a 25% interest in the Copper Mountain mine for $28.75 million, plus the right to purchase all of the mine’s copper production. The deal also left Mitsubishi responsible for arranging a $250-million project loan, which it has not yet done.

According to a 2008 feasibility study, the Copper Mountain mine should produce a 20.2% pretax internal rate of return and carries a net present value of $263 million, using a 5% discount rate.

Copper Mountain purchased the Similco property in 2006. Between 1927 and 1996, the three pits onsite produced roughly 2 billion lbs. of copper. The deposit at Similco is an alkaline porphyry system with a strong structural component. Copper Mountain’s exploration efforts have defined new mineralization between, outside of, and beneath the three old pits.

Copper Mountain’s share price climbed steadily during 2009, rising from 45¢ to above $2. It closed recently at $2.19. The company has 77 million shares outstanding.