Mercator lowers Mineral Park’s copper-moly reserves

Mercator Minerals (TSX: ML; US-OTC: MLKKF) has updated the resource and reserve estimate for its Mineral Park copper-molybdenum mine in Arizona, noting that while reserves have decreased, the open-pit operation still has a promising life ahead.

The new estimate pegs reserves at 369 million tons (335 million tonnes) grading 0.12% copper, 0.037% moly and 0.08 oz. silver per ton. This replaces the previous estimate of 389 million tons (353 million tonnes) of 0.138% copper, 0.04% moly and 0.08 oz. silver. Tonnage has dropped by 5%, and copper and moly grades have slid by 13% and 8%.

The latest reserve contains 876 million lb. copper, 273 million lb. moly and 31 million oz. silver. Another 72 million lb. copper will be recovered through leaching. This compares to the previous estimate of 1 billion lb. copper, 310 million lb. moly and 31 million oz. silver, plus another 86 million lb. copper estimated to be recovered from leach ore, notes Laurentian Bank Securities’ analyst Christopher Chang.

Vancouver-based Mercator says the new update gives a better picture of the actual mined grades, particularly in the transition zone, as it moves from mining supergene to hypogene mineralization. 

It explains that the decrease in the new estimate results from mining the higher-grade supergene material over the past six years, falling copper grades in the transition zone and a more detailed model of the new resource estimate, which uses data from both blasting and drilling. It says that the estimate reflects updated operating costs, metal recoveries and copper and moly prices of US$2.60 per lb. and US$9.65 per lb. Based on the new reserves,  Mineral Park has an expected 20-year life.

Given the improved understanding of Mineral Park’s potential, the junior has tweaked its forecasted output over the next five years, or 67 months, starting this June to the end of December 2018. Over this time, it anticipates total production of 255 million lb. copper, 63 lb. moly and 3.6 million oz. silver.

Chang notes that the 67-month operating guidance is in line with his predictions, adding it “should provide the market with greater comfort on the company’s production profile going forward, as Mineral Park’s mine plan has deviated considerably from its previously disclosed five-year plan announced in October 2011.”

The analyst has kept his “buy” recommendation and 45¢-per-share target on the stock.  Mercator closed June 27 at 18.5¢, losing nearly 12% over the two trading sessions since the estimate was announced.