Augusta advances Rosemont copper project (November 03, 2008)

Augusta Resource (AZC-T, AZC-x) has improved metallurgy and discovered a new mixed oxide-sulphide zone at its Rosemont open-pit copper-molybdenum-silver project in southern Arizona.

In the latest testing, molybdenum recovery improved the most to 70- 75%, up from 56% in Rosemont’s 2007 bankable feasibility study. Silver recovery was 80-82%, up from 78%, and copper recovery 84-86%, from 84%.

The purpose of the testing was to optimize grades, as well as produce concentrate samples for marketing and tailings samples to be used in the final engineering design. The company says these results, which looked at the first three years of the project’s 18.2-year mine life, were significant financially. According to the feasibility, the project has a payback period of three years, so the improved recoveries mean increased cash flow. Augusta didn’t say how much cash flow would rise as it is still doing test updates on ore for the rest of the mine life. A full update will be included in the updated bankable feasibility study coming out at the end of the year.

Augusta has also improved its measured and indicated resource estimate, if only slightly, by 5%. Drilling has added 386 million lbs. of copper equivalent to the measured and indicated category, and 286 million copper-equivalent lbs. to the inferred.

The drilling gave Augusta a better understanding of the Rosemont deposit. Drilling 20 holes and sampling 10 previously unsampled geotechnical holes from 2006, the company ended up identifying a zone of partial oxidation consisting of mixed secondary oxides, secondary sulphides and primary sulphides. The area, now known as the “mixed” zone, occurs along a structural zone in the northwest deposit area, and has been separated into its own category in the resource estimate.

Measured and indicated resources now stand at: 103.4 million tons of oxide material grading 0.20% copper; 36.9 million tons of mixed material at 0.53% copper and 0.005% molybdenum; and 524 million tons of 0.50% copper and 0.015% moly.

In the inferred category, there are a further 30.4 million tons of oxide resource at 0.24% copper, 14.5 million mixed tons at 0.42% copper and 161 million tons of sulphide resource at 0.45% copper and 0.008% moly. Also present is minor byproduct silver.

Augusta is currently working on an environmental impact study for Rosemont. If it reaches production, the mine will operate at a capacity of 75,000 tonnes per day, producing 220 million lbs. copper, 4.5 million lbs. molybdenum, 2.7 million oz. silver and 15,000 oz. gold per year. An additional heap-leach plant would allow the company to produce another 14 million lbs. copper cathode per year for the first eight years of production. Augusta hopes to bring the $725-million project into production by 2011.