Aura scoops up active copper mine in Mexico

Aura Minerals (ORA-T) has bought a producing copper mine in Mexico for $70 million in cash and shares that has the potential to turn out 28,000 tonnes of copper concentrate per year.

The Arroyos Azules copper mine, acquired from Clapham Luxembourg, is part of the Aranzazu project in Zacatacas state and is currently producing only 5,000 tonnes of copper concentrate per year.

Aura, formerly Aura Gold, plans to spend $10 million to $15 million to ramp up production to full capacity to 700,000 tonnes of ore per year; 2,000 tonnes per day.

To help pay for the project, Aura raised $60 million in a ‘best efforts’ private placement led by Canaccord Capital, and included a syndicate of agents, in May. More than 44 million shares were issued at $1.65 each.

Aura shares were trading at $1.71 per share mid-day today, off 4% or 7 on a volume of 84,000 shares.

Aura got word of the opportunity to buy the Aranzazu project from Zacoro Metals, a private company based in Toronto.

Zacoro will receive a finder’s fee for introducing Aura to Clapham of US$5 million in Aura shares and another US$3 million in cash for data and equipment that Zacoro provided to the project.

The project is also subject to a 1% net smelter returns royalty provided the average monthly copper price doesn’t fall below US$2 per lb.

The deal includes all of the mining concessions on a 140 sq. km of land, a 2,000-tonne-per day mill and flotation plant, all equipment and a geology data base consisting of 590 drill holes along 2,200 metres of strike length.

All current production at Arroyos Azules is from the underground though in the past the deposit was mined via open pit.

As of 2007, the deposit has an indicated resource of 25.7 million tonnes grading 1.02% copper and an inferred resource of 8.8 million tonnes grading 0.81% copper. A cutoff of 0.5% copper was used.

Although the deposit contains both gold and silver mineralization neither were accounted for in the last resource estimate. Aura says that historical production records show the copper concentrate averaged 10.38 grams gold per tonne and 370.45 grams silver per tonne. The company plans to complete a new technical report in the near future which will include studying the distribution and recovery of precious metals.

Aura plans to spend $4 million to $6 million on exploration over the next year, following up on the work completed over the last year on a continuous high-grade copper zone with precious metals content. Aura would like to eventually mine these areas using the long-hole stoping method.

Results from recent drilling include 95 metres grading 1.8% copper, 2.02 grams gold per tonne and 14.9 grams silver, 54 metres grading 1.55% copper, 0.37 gram gold per tonne and 15.1 grams silver, as well as a 20.1-metre intersection grading 3.49% copper, 1.08 grams gold and 31.8 grams silver.

The Arroyos Azules deposit is a subvertical skarn deposit hosted in Cretaceous-age limestones which have been intruded by a Tertiary-age intrusive complex. Mineralization is comprised of chalcopyrite, bornite, chalcocite, tetrahedrite, tennantite, sphalerite, and molybdenite.

Aura also plans to test the potential to recover zinc and molybdenum, which also occur in the deposit, but have never been produced.

Aura, a company whose focus has been on exploration in Brazil, is also actively advancing its Serrotje da Laje deposit part of the Arapiraca copper-gold project with iron ore potential in northeastern Brazil. Five drills are in operation and the company has drilled 14,000 metres of infill and step-out drilling since the beginning of the year but has not received any results yet due to a backlog at the main lab in the country.

Aura plans to advance the project to feasibility study level by the end of the year.

The company has started an extensive surface trenching and sampling program to better define the area of the deposit that would form a starter pit.

Environmental baseline work, started in the third quarter last year, will continue until the end of the year. A socio-economic study has been completed and the company has now started a structured community relations program.

Aura is also working out hydrology, hydro-geological, water supply, mine geotechnical, tailings impoundment and waste dump design.

The company has worked out some preliminary details to ship copper and iron ore including port options linked by rail to the project.

The company has sourced some options for electricity as well.