Copper Mountain Mining on runway to triple 2020 output

British Columbia-based Copper Mountain Mining (TSX: CMMC; ASX: C6C) is on a runway to triple 2020 production in the medium term, president and CEO Gil Clausen tells The Northern Miner.

The mid-tier miner’s eponymous cornerstone mine is just 300 km east of Vancouver. It underpins the company’s immediate and medium-term growth plans to go from about 100 million copper equivalent lb. per year to 140 million lb.

Further out and farther afield is the feasibility study-stage Eva Copper project in Queensland, Australia. It holds the potential to add meaningful copper and gold units to potentially double Copper Mountain’s total output on a copper-equivalent basis.

Clausen says the company had a solid start to the year in terms of Copper Mountain’s performance, and given the recent record copper price levels, it bodes well for the second quarter.

The company reported record quarterly production in the March quarter of 30.4 million lb. of copper equivalent, comprising 25.5 million lb. of copper, 8,187 oz. of gold, and 160,484 oz. of silver.

This performance translated into a record quarterly C1 cash cost of US$1.15 per lb. copper produced, at an all-in sustaining cost (AISC) of US$1.46 per lb. copper and all-in cost (AIC) of US$1.71 per lb. copper.

The company reported record quarterly revenue for the first quarter at $162.2 million, from the sale of 27.5 million lb. of copper, 8,553 oz. of gold and 161,657 oz. of silver, net of pricing adjustments.

It translated to a record gross profit of $96.3 million and net income of $52.1 million, resulting in earnings per share of $0.18.

The Copper Mountain copper-gold-silver deposit was first mined as an underground operation in the 1930s, before the company came along, acquired the 7,300-hectare property and proved up a five-billion-pound copper resource.

Soon after, veteran former CEO Jim O’Rourke pulled the trigger on building a mine to pay for future exploration and expansions.

Fast forward several years to 2016, and the company was reporting production of more than 100 million lb. copper in concentrate per annum, helped by the addition of a new secondary crusher, which he says was “a game-changer” for the operation, given some of the material being processed was more challenging than expected. “That was a game-changer for the operation, allowing us to send 40,000 tonnes per day through the mill,” he said.

The Copper Mountain mine hosts 43-101-compliant proven and probable reserves of 403 million tonnes grading 0.24% copper, 0.11 grams gold per tonne, and 0.76 grams silver per tonne for 2.15 million lb. copper, 1.4 million oz. gold and 9.8 million oz. silver.

Clausen says the Copper Mountain mine, just outside of Princeton, was processing higher-grade ore during the most recent quarter. As a result, the average mill feed grade rose to 0.42% copper, compared with an average feed grade of 0.30% copper a year earlier.

The mined grade was higher in the first quarter and similar to the grade mined in the fourth quarter of 2020. The 2021 development sequence plan has proportionally more ore coming from Phase 3 of the Main pit in the first quarter, which has higher grade,” he said.

On the back of the strong first-quarter production results, the company expects to achieve the upper end of its annual guidance range of 85 to 95 million lb. of copper.

The company expects production to normalise from the first-quarter levels to levels similar to that of the fourth quarter of 2020. Production in the fourth quarter of 2021 is planned to be higher with the commissioning of the ball mill three expansion project. The project is expected to help reduce costs, with the 2021 all-in cost guidance set at US$1.80 to US$2.00 per lb.

Clausen says the company is making steady progress on the ball mill three expansion project with construction now well advanced. The project is designed to increase mill throughput to 45,000 tonnes per day from 40,000 tonnes per day and improve copper recovery due to achieving a finer grind of ore.

Demolition has been completed where the third ball mill is to be installed, and the raft foundation has been poured on top of the lean concrete and bedrock. The company is currently erecting forms and installing rebar for the mill pier foundations, with concrete poured in April.

The project is on track for commissioning in the third quarter of 2021.

Plans are already advancing to push the throughput even higher to 65,000 tonnes per day. The expansion has the potential to push output to over 140 million lb. of copper per annum. The company has pegged an after-tax net present value (8% discount) of US$1 billion to the 65,000 tonnes per day scenario, with the mine’s C1 cash costs expected to fall to US$1.19 per lb.

Meanwhile, Clausen says the company continues to undertake exploration drilling at Copper Mountain, focusing on the New Ingerbelle deposit just one kilometre away across the river.

The deposit has higher gold credits and is expected to push output to 50,000 to 75,000 oz. gold, including about 300,000 oz. of silver per year. “New Ingerbelle is important to us because it essentially doubles our mine life that brings it to 31-years Copper Mountain mine life [based on 45,000 tonnes per day throughput],” says Clausen.

The 2021 exploration program started in early March. The program consists of exploration drilling to expand resources and reserves in the Copper Mountain North and the New Ingerbelle deposits. “The deposits remain open at depth,” Clausen says.

The total program for 2021 consists of about 20,000 metres of diamond drilling.

Meanwhile, the company was preparing to enhance the project pipeline. In 2018, the company acquired Altona Mining in Australia for about A$93 million (US$72 million), giving it another 4,000 sq.km land package, with shovel-ready Eva Copper at the top of the list of the development pipeline.

The deal also brought in fresh leadership under new CEO Clausen, bringing with him his prior experience with successful companies such as Brio Gold, LeaGold Mining and Augusta Resource, relevant to the Copper Mountain narrative at hand.

“If we pull the trigger on Eva, we can be in production there in 18 months via a much similar operation than Copper Mountain,” he says.

A 2020 bankable feasibility study on the project had calculated an after-tax net present value of US$437 million, with an internal rate of return of 29%. Clausen says the project is rare in that its capital requirement is only US$382 million to add 100 million lb. of copper to the production profile.

Exploration activities also continue in Australia. The exploration team mobilised to Cloncurry in mid-March and is preparing for an extensive field program to discover new deposits within some of the high potential areas within the company’s large landholdings within the Mount Isa Inlier region of Queensland.

Detailed geochemical and geophysical surveys will be used to target exploration drill holes in some areas, whereas other areas to be drilled will follow up on previous drill results. The drill program will focus primarily on copper and copper-gold targets.

The 2021 exploration program consists of 6,000 metres of reverse-circulation drilling and 1,200 metres of diamond drilling.

On the operations side, Clausen also says the company has committed to reducing its greenhouse gas emissions, with a commitment to be net-zero by 2035.

The company has already done significant work to this end, reducing the carbon intensity from about three tonnes of carbon dioxide per tonne of copper produced in 2019 to about 2.3 per tonne in 2020.

The new mill expansion will drop that figure by another 10%, Clausen says.

Copper Mountain is also installing a trolley assist trial at the mine. The main pit ramp is being modified to accommodate about one km of overhead electric wires haul trucks can tap into for the steep, loaded haul out of the pit. The system will go live late this year and is expected to reduce GHG emissions further.

Copper Mountain equity trading in Toronto has almost tripled to a 12-month high at $5.07 per share early in May. Shares last traded on June 13 at $4.16, which capitalises the company at $868.44 million.