Lumina banks on higher copper prices

Vancouver — A few years back, when the price of bullion was touching US$260 per oz., several junior explorers began acquiring gold projects in the belief that prices would soon improve. They did, and the strategy is already starting to pay off. Now, with base metal prices touching near historic lows, newly minted Lumina Copper (LUM-V) is banking on a similar performance for copper prices.

Lumina was formed in late May through the merger of CRS Copper Resources and capital pool company, First Trimark Ventures. A name change and a 10-for-1 share consolidation paved the way for the new company “to acquire large, defined deposits in mining-friendly countries, putting in place the assets and structure to profit from a cyclical copper market.”

Privately held CRS had been formed in October 2001 by Anthony Floyd and Ross Beaty. It went on to acquire the rights to the Casino, Redstone and Hushamu copper projects.

The Redstone property is in the Nahanni mining district of the Northwest Territories and hosts the historic Coates deposit, which was discovered in the 1960s. A classic stratabound “red-bed type” deposit, Coates displays continuity in both grade and thickness for more than a 6-km strike length to depths of 2.4 km downdip.

The copper-bearing beds are hosted by the Transition zone of the Coates Lake group, which unconformably overlies the Little Dal group, a sequence of continental clastics and carbonates. The property covers a broad syncline that has been thrust eastward along the Coates Lake fault, putting the Coates Lake group over Paleozoic strata.

Disseminated copper mineralization occurs throughout the Coates Lake group. The most significant occurrences are in the eight copper-bearing beds of the Transition zone. The lowermost bed, known as B1, marks the highest grades, whereas the B3 bed has the greatest thickness. There is a lateral copper-iron zonation, with the iron-rich zones being close to the margins of the basin. Mineralization in B1 consists mainly of chalcopyrite in the south and east areas, with increasing chalcocite-bornite content farther to the northwest, toward the centre of the basin.

On November 2002, an independent technical review gave the property an inferred resource of 33.6 million tonnes grading 3.92% copper and 9 grams silver per tonne.

Lumina plans to launch a $750,000 drill program over the project later this year.

The Casino porphyry copper-gold-molybdenum deposit is in the west-central Yukon, 300 km northwest of Whitehorse. The property has undergone varying degrees of exploration since the 1960s, though most of the work, including 68,465 metres of drilling in 1993-94, was performed by Vancouver-based Pacific Sentinel Gold.

Overall, some $10 million has been spent in the ground, generating a measured and indicated resource of 323 million tonnes grading 0.28 gram gold and 0.26% copper in the sulphide zone, plus 103 million tonnes grading 0.32 gram gold and 0.35% copper in the supergene zone. There are also 36 million tonnes of oxide material grading 0.32 gram gold per tonne and 0.36% copper. A separate gold oxide zone hosts 38 million tonnes averaging 0.57 gram gold and 0.07% copper using a cutoff grade of 0.4 gram gold per tonne.

The Hushamu copper-gold deposit, also known as Expo, is in the northern part of Vancouver Island, 27 km from the Island Copper deposit. Island Copper entered production in the early 1970s and closed in the mid-1990s under the ownership of BHP Minerals, now part of BHP Billiton (BHP-N).

Over the years, $3.4 million has been spent on Hushamu, mostly in the early 1990s by Jordex Resources (now delisted) and BHP Minerals. More than 25,000 metres of drilling led to a measured and indicated resource of 230.9 million tonnes grading 0.28% copper and 0.31 gram gold, based on a 0.2% copper cutoff. The property also hosts an inferred resource of 52.8 million tonnes grading 0.28% copper and 0.38 gram gold.

Owing to low grades, the Casino and Hushamu properties will remain dormant until copper and gold prices improve further.

El Galeno

Earlier this month, Lumina inked a deal to pick up the El Galeno copper-gold property in northern Peru, 600 km north of Lima. The porphyry copper-gold deposit hosts a historical inferred mineral resource of 486 million tonnes grading 0.57% copper and 0.14 gram gold, based on a 0.4% copper cutoff. That is equivalent to 6.1 billion lbs. contained copper and 2.2 million oz. gold.

“This acquisition puts us on the road to establishing Lumina as the most leveraged copper investment available,” says Floyd, adding that the acquisition will boost the company’s inferred resources to 9.32 billion lbs. copper and 2.8 million oz. gold, with measured and indicated resources remaining at 4.4 billion lbs. copper and 7.3 million oz. gold.”

Copper was discovered on the property in 1993. Newmont Peru, a subsidiary of Newmont Mining (NEM-N), and North Compania Minera sunk 21 diamond drill holes and 30 reverse-circulation holes, cutting porphyry copper mineralization in both the lower Cretaceous sediments and dacitic intrusives.

Lumina can buy the property from an arm’s-length private Peruvian company by paying US$2 million over four years. Payments in the first year total US$180,000, with the remaining US$1.82 million subject to staged reductions ranging from 50% to 20% if the average copper price drops below a certain point.

In addition, half of the final payment due in the first year (US$100,000), plus all the rest of the payments, can be made in Lumina shares, and the final payment of US$1.1 million can be postponed for up to three years by paying US$100,000 per year, half of which is applied to the delayed payment. The vendor also receives US$250,000 upon completion of a positive feasibility study, a further US$250,000, should mine construction begin, and a final US$1.3 million one year after the start of commercial production.

Lumina has $3.3 million in working capital, which is enough to cover acquisition payments in 2003 and 2004.

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