Cashin, Lisbon get thumbs-up sign

An independent study has concluded that the Cashin copper deposit of Constellation Copper (CCU-T) could be economically mined by trucking run-of-mine ore to the nearby Lisbon Valley property in Utah.

The report, written by SRK Consulting, puts measured and indicated resources at 3.45 million tons grading 0.55% copper. The material is amenable to open-pit mining methods, at a stripping ratio of 1.64-to-1.

Cash operating costs are projected at US65 per lb. and the rate of return at 107%, assuming a copper price of US85 per lb. The return jumps to 160% when copper prices are a nickel higher.

The project’s development depends on Lisbon’s own development, for which Constellation is seeking financing. An updated feasibility study puts that project’s capital cost at US$49 million.

Constellation has inked a deal to purchase crushing and solvent extraction-electrowinning facilities capable of producing 54 million lbs. copper annually. A deposit of US$1 million has been placed in escrow, pending the raising of additional funds.

At a copper price of US95 per lb., Lisbon generates US$83 million in net cash flow (after payback of capital). The net present value stands at US$42.2 million, using a discount rate of 7.5%.

Constellation still requires construction and air quality permits. The old ones, which expired last year, were granted in 1997, before the project become embroiled in a failed appeal process by anti-mining groups that was followed by a drop in copper prices.

Combined measured and indicated resources at Lisbon Valley stand at 49 million tons grading 0.48% copper. The resource is spread among three separate zones and excludes 1 million tons, grading 1.9% copper, that was recently outlined south of the GTO deposit. The extention is not considered amenable to open-pit mining methods.

Meanwhile, at Cashin, Constellation has sunk eight reverse-circulation drill holes and is in the process of completing the final hole of the program. All were collared on the southern margin of measured and indicate resource in order to bump up known inferred resources to those categories.

Based on 77 holes drilled in 1994 and 1995, Cashin hosts a total resource of 13 million tons grading 0.5% copper. The estimate includes the measured and indicated portion.

Results are available for the first three holes. Hole CR-1 intersected 30 ft. (starting at 10 ft. downhole) of mineralization grading 0.414% copper and 155 ft. (from 70 ft.) grading 0.535% copper.

Results for holes 2 and 3 were similar, with the former yielding 101 ft. (from 25 ft.) at 0.593% copper and the latter, 200 ft. (from 10 ft.) at 0.675% copper. Hole 2 was lost at 126 ft. down, so it bottomed in mineralization, and results for the bottom of hole 3 are pending.

Constellation also has begun a core-drilling program to test a possible extention of the deposit to the south. At surface, the target appears as a 300 ft.-high cliff of copper-stained sandstone.

A total of 20 holes will be drilled over a strike length of 500 ft., a width of 400 ft. and a thickness of 200 ft. So far, the first has pulled up 100 ft. of disseminated malachite and chalcocite, though results are pending.