Copper Mountain weighs re-opening mine in B.C.

Re-starting a past-producing copper and precious metals mine in southern British Columbia looks more and more likely for Copper Mountain Mining Corp. (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 Mining’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 C$402-million range (excluding a C$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 pre-tax payback period of just under three years, a pre-tax internal rate of return of 20.2% and a pre-tax net present value, at a 5% discount rate, of C$263 million.

The Copper Mountain copper-gold-silver porphyry deposits contain a measured and indicated resource of 260.2 million 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 meters 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.

An open-pit mine design was based on processing 35,000 tonnes per day of mill feed and producing a copper concentrate containing gold and silver.

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 mine operating cost is estimated to be US$7.31 per tonne of ore milled.

Operating costs are estimated at US$1.28 per lb. copper (net of gold and silver credits) during the first five years, US$1.13 per lb. copper (net of gold and silver credits) from years six to ten, and US$1.27 per lb. copper average (net of gold and silver credits) for the life of mine.

Base case metal prices used are those from the June 18 London Metal Exchange forward prices to 2013: (US$3.18 per lb. copper in 2011, US$3.06 per lb. copper in 2012, US$2.94 per lb copper in 2013) and US$1.80 per lb. copper for the balance of the mine’s 15-year lifespan.

In Toronto at mid-day, Copper Mountain was trading up 8 per share at $1.52.

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