Copper Mountain Grows Similco

VANCOUVER — A revised mine plan for Copper Mountain Mining’s (CUM-T, CPPMF-O) Similco project foresees the mine producing more copper for longer, based on an increased reserve estimate for the British Columbia property.

Copper Mountain updated the Similco resource in mid-April, boosting measured and indicated tonnes by 42% and grade by 2.3% to 518.6 million tonnes averaging 0.311% copper. Now the company has incorporated that resource increase into a new mine plan for the past-producing site.

Proven and probable reserves at the property, 15 km southwest of Princeton in southern B. C., now sit at 211.2 million tonnes averaging 0.361% copper for 1.68 billion contained pounds copper.

Copper Mountain plans to extract that copper reserve, which lies around and underneath three historic pits that will grow into one super pit, at a rate of 35,000 tonnes per day. The operation would produce 100 million lbs. copper per year in concentrate, with gold and silver credits.

By the end of a 17-year mine life, the operation will have produced 1.47 billion lbs. copper, 452,016 oz. gold, and 4.49 million oz. silver. The company says the project will create 274 permanent jobs.

According to the project’s feasibility study, which came out in mid-2008, it will cost $402 million to build the mine. Once operational, the project should provide a 20.2% pretax internal rate of return (IRR) and it carries a net present value (NPV), using a 5% discount, of $263 million. Copper Mountain has not yet disclosed updated projections for capital cost, IRR or NPV.

Mitsubishi Materials has agreed to buy a 25% interest in the Similco project for $28.75 million. The deal will leave Mitsubishi responsible for arranging a $250- million project loan. In exchange, the materials major will have the right to purchase all of the mine’s copper concentrate.

In the meantime, Mitsubishi is financing operations at the site through a $28.75-million line of credit; Copper Mountain has already spent the majority of that money on long-lead equipment items and continuing project activities, such as detailed engineering studies.

Copper Mountain purchased the Similco property in 2006. Between 1927 and 1996, the three pits onsite produced roughly 2 billion lbs. of copper. The deposit at Similco is an alkaline porphyry system with a strong structural component. Copper Mountain’s exploration efforts have defined new mineralization between, outside of, and beneath the three old pits.

Copper Mountain lost 24¢ on news of its finalized agreement with Mitsubishi to trade at $1.26 in Toronto. The company has a 52-week range of 31¢-$1.60 and 32 million shares outstanding.