Three Valley Copper suspends mining operations in Chile

Three Valley Copper (TSXV: TVC; US-OTC: TVCCF) has temporarily suspended operations at its Minera Tres Valles (MTV) complex near the city of Salamanca in Chile due to the consistent underperformance of its Don Gabriel open pit mine, the company’s primary source of ore. 

The company also halted construction of the block cave at its Papomono mine, located three km away from the Don Gabriel mine, in the same complex.  

Michael Staresinic, the company’s president and CEO, told The Northern Miner that it might take at least three to four months for the company to restart its operations.  

“Ideally we are working with our lenders and our advisors to determine a strategy that is in the best interest of the project,” said Staresinic. This, he said, could include bridge loans, debt financing, debt conversions or waivers of operating and other covenants.  

Staresinic noted that if things had gone according to plan, the Papomono mine, which is “high grade, low cost,” could have started operating in a week. But the poor performance of the Don Gabriel operation, meant that the company didn’t have the capital to operate Papomono.  

“This is block caving. Think of it as an hourglass, once you turn it over, you can’t stop it. Once you start a caving operation, you must have the resources for continuing it, in the absence of which, we risk damaging the mine,” he said.  

Signs of trouble emerged in May last year when the company published its first quarterly report.  In it, Staresinic stated that “the ramp-up of operations” at Don Gabriel started slower than expected and that the company experienced a higher proportion of waste to ore and lower grade than expected.  

In August, the company revised its guidance for 2021, reducing its expected copper production from 6000 to 7000 tonnes to 4,500 to 5,500 tonnes. Actual production came in at 4,209 tonnes. 

In November, the company announced that its lenders agreed “not to accelerate or enforce their rights or remedies” should Minera fail to make its scheduled loan repayments or replenish the operating reserve account to re-establish the minimum required reserve. 

To preserve liquidity, the company has suspended exploration at Minera, where more than 100 copper outcrops have been identified along with70 artisanal mining sites with geological characteristics like that of the Papomono and Don Gabriel orebodies, the company says. 

While the company has about US$7 million in working capital, it says, the amount isn’t enough to “finance the expected funding gap” at Minera and pay for the company’s ongoing requirements, the company said.  

Three Valley Copper owns 95.1% of the Minera complex. It purchased an initial 70% stake for US$40 million from the Vecchiola Group, a family business, in October 2017, and raised its stake to 95.1% in December 2021. 

The news sent Three Valley Copper’s shares plunging 78.4% or 14.5¢ to end the day at 4¢ apiece. Over the last year the company has traded in a range of 16.5¢ and $1.02. Three Valley Copper has 112.1 million common shares outstanding.