Lundin wants to bring Touro back to its copper roots

Lundin Mining (LUN-T) wants to give an old copper mine in Spain its identity back.

The company announced it has reached and agreement with the two owners of the Touro copper project in the northwest part of the country that will allow it to build a mine at the site which had been switched from a copper mine to an aggregate mine for the construction industry back in the 1980s.

The deal gives Lundin the option to buy an 80% stake in Touro for $79 million and it has until Oct. 1 to exercise that option. Until then it will continue doing its due diligence, which includes drilling and other technical work.

The payments break down as $13.2 million when and if Lundin exercises the option, $39.4 million when it makes a construction decision and the final $26.3 million when commercial production is reached.

Lundin is also on the hook for all construction costs if it makes a positive construction decision. At that point the firms would form a joint venture with Lundin as the operator and those capex costs would be repaid via a preferentially interest in surplus operating cash flows.

The company says it has already mobilized “several” drill rigs and that it is well on its way to deciding whether or not the exercise the option.

Lundin said part of the project’s appeal is its easy access to known mineral resources, as it hosts three pre-existing open pits and copper mineralization is basically flat lying and at or near surface.

Copper-gold mineralization at the project is characterized by disseminated to semi-massive and rarely massive sulphides comprised of a simple, coarse-grained assemblage of pyrrhotite, an iron sulphide, and chalcopyrite, a copper-iron sulphide, locally associated with some gold.

Mineralization is hosted within a generally shallow dipping layered succession of metamorphic rocks, the mineralized layers commonly ranging between 10 and 60 metres thick.

While the property hosted a copper mine in the 1970s and early 1980s it was turned into an aggregate mine after open pit copper mining ceased in 1986 do to low prices. As such, it hasn’t received any exploration or mineral resource study work since that time.

The project has a historical non-compliant resource of 196 million tonnes grading 0.39% copper and is made up of 205 mining claims that cover 57.4 sq. km of ground.

In Toronto on April 12, Lundin share were up 3% or 15¢ to $4.46 on 2.56 million shares traded.