Copper Mountain weighs 2010 reopening of B. C. mine

Restarting a past-producing copper and precious metals mine in southern British Columbia looks more and more likely for Copper Mountain Mining (CUM-V).

A feasibility study on the company’s Copper Mountain project, about 15 km south of Princeton, found that production at the former open-pit mine with a 35,000- tonne-per-day mill is economically viable.

Copper Mountain’s 100%-owned mine is designed to produce about 100 million lbs. copper per year in a copper concentrate with gold and silver credits.

Capital costs for getting the former mine back into production are estimated to fall in the $402-million range (excluding a $35.4-million contingency allocation) and production is scheduled to start at the end of 2010 with an anticipated initial mine life of 15 years.

Numbers in the feasibility study were calculated on a base case using the London Metal Exchange forward pricing as of June 18 for the mine’s first three years of production and a long-term copper price of US$1.80 per lb. for the balance of the mine’s life.

Gold and silver long-term pricing was US$675 per oz. and US$12 per oz., respectively.

The project would have a pretax payback period of just under three years, a pretax internal rate of return of 20.2% and a pretax net present value, at a 5% discount rate, of $263 million.

The Copper Mountain copper-gold- silver porphyry deposits contain a measured and indicated resource of 260.2 million short tons averaging 0.357% copper, for total contained metal of 1.8 billion lbs. copper.

The National Instrument 43-101 compliant resource estimate was based on about 450,000 metres of drilling in more than 5,000 drill holes. Proven and probable mineral reserves total 194.6 million tons averaging 0.33% copper and containing 1.3 billion lbs. copper.

The initial five-year average grade of mill feed is estimated at 0.39% copper (0.43% copper equivalent), which would result in an average annual production of 96 million lbs. copper for the same period.

The lower-grade material (below 0.25% copper) would be stockpiled for processing towards the end of the mine life.

The average waste-to-ore ratio for the life of mine is estimated at 1.8:1 and metallurgical testing suggests a recovery of 89.2% for copper, 65% for gold, and 49% for silver.

The life-of-mine operating cost is estimated at $7.31 per tonne of ore milled. Operating costs (net of gold and silver credits) are estimated at US$1.28 per lb. copper during the first five years, and US$1.13 per lb. copper from years six to 10, averaging US$1.27 per lb. copper for the life of mine.

The study used base-case copper prices of US$3.18 per lb. in 2011, US$3.06 per lb. in 2012, US$2.94 per lb. in 2013, and US$1.80 per lb. copper for the balance of the mine’s lifespan.

Copper Mountain is currently trading at about $1.52 per share.

The company has a 52-week trading range of $1.35-2.66 per share and 15.55 million shares outstanding.