EMED clears major permitting hurdle

Vancouver – After years of struggling through a bureaucratic, political and legal quagmire, Cyprus-based EMED Mining (EMD-T, EMED-L) finally looks to have production at its Spanish copper project within sight.

On March 14 the regional government of Andalucía announced that it had decided it was in fact legal to transfer the mineral rights of the historic Rio Tinto copper mine to EMED’s subsidiary. With that decision, full transfer of the rights can now go ahead, as can the long-delayed permitting and re-commissioning of the historic open pit.

“Last month there was a very significant step forward,” said Harry Anagnostaras-Adams, managing director of EMED, by phone. “The government confirmed that it will now process all the various applications all together to speed it up, and we could see the mine back in production next year.”

“It’s great to have arrived at this moment,” continued Anagnostaras-Adams, “because it’s been quite an arduous process over the past four years.”

The circumstances surrounding the news only emphasized the frustrations of those involved. Days before the positive announcement, four union workers actually barricaded themselves in an old shaft of the mine in protest of the slow pace of permitting. A media circus ensued, and apparently due to the attention and pressure the local government made firm commitments to accelerate the political process.

Anagnostaras-Adams said that all seven local mayors, the opposition parties and the unions are now all on board.

“There’s a lot of work yet to be done, but the real losing-sleep-sort-of-phase has disappeared because of that decision by the government,” said Anagnostaras-Adams.

As well, the government has decided to give EMED full control of the tailings dams that had been a big part of the dispute with local land-owners. After the mine was shut locals managed to buy up 66% of the dams, but the company can now safely manage the dams in tandem.

With the permitting process now open, EMED could see the start of production at the RioTinto mine in 2012. Speeding along the development process, the infrastructure at the mine is largely operational and will only need minor refits like wiring, plumbing and digitization, according to Anagnostaras-Adams. The company plans to run the mine at the same capacity as it was previously operated.

Rio Tinto (RIO-N, RIO-L, RIO-A) ran the mine until the early 1990s, when it was then divested to a local workers co-operative. Between 1995 and 2003, according to Anagnostaras-Adams, the mine was beset by problems of fraud, bankruptcy, litigation, and of course low copper prices.

“It became sort of an economic, social and political nightmare. And that’s what we took on,” said Anagnostaras-Adams. EMED optioned into the project in 2007, gained full control in 2008, and ever since has been working on cleaning up the books, building political and community trust, and weaving through the layers of legal and bureaucratic hurdles.

“The announcement by the relevant minister was that all the legal legacy issues were now behind us,” said Anagnostaras-Adams, “they’re history now.”

Once the company gets the Rio Tinto mine operational, at a cost of roughly $120 million, it expects as a base case to produce 82 million lbs. of copper in concentrate a year at US$1.37 per lb. Using US$2.50 per lb. copper, the project has a net present value of US$262 million with a 10% discount, and a 41% internal rate of return.

With 123 million proven and probable tonnes of reserves grading 0.49% copper for 1.3 billion lbs. copper, mine life is at least 14 years.

EMED has roughly $30 million in cash on hand, with plans to raise much of the remaining needed capital through debt financing. The company has roughly 700 million shares outstanding, or 935 million fully diluted.

The Rio Tinto mine also has underground mining potential, while the company is also developing a gold project in Slovakia and recently optioned into a tungsten project in Portugal.

EMED’s share price recently closed at 25¢, having initially listed on the TSX at 15¢ in December.