Constellation Copper stops mining at Lisbon

The troubled Lisbon Valley copper project in southeastern Utah will shut down mining in early 2008, converting to a leach-only operation.

Owner Constellation Copper (CCU-T) will lay off about 100 of its Lisbon Valley workforce, and has warned that it will write off some of the carrying value of the operation in its third-quarter financial statements. Those statements are already delayed, and management is under a voluntary cease-trading order, but the company said it would be ready to file the third-quarter report by Jan. 14.

Problems at Lisbon Valley centre on the leach pad, which is performing much more slowly than had been expected. An increased mining rate and placement of primary-crushed ore on the leach pads have not made a large difference to production. An intermediate-leach-solution system to increase the metal content in the pregnant leach solution coming off the pad has had more success, increasing solution flow by 6%.

Working against the leach system is the ore type; most new ore placed on the pad now is sulphide material that is more difficult to leach than the oxide material first placed on the pad. Production has averaged 680 tonnes a month over the last four months.

Forward sales contracts, which have also been a burden on the company, have been renegotiated. Remaining contracts are being settled at monthly average prices, rather than at the US$1.86 per lb. originally contracted. The company also closed out over 3,300 tonnes in forward sales at US$3.08 per lb. (US$6,790 per tonne).

The company also engaged GMP Securities to help it look for financing, and opened a data room for possible partners or bidders.