Prospects in Bolivia, Honduras boost share price of Arimetco

Shares of Arimetco International (TSE) have soared lately as the Arizona-based copper miner extends its influence into Latin America while expanding production at copper mines in the U.S.

The shares recently jumped to over $5 from a low of $1.90 after Arimetco announced a rapid-fire series of agreements that gives it a significant presence in Bolivia and Honduras.

Arimetco is currently poised to become the first foreign exporter of cathode copper from Bolivia after acquiring an 85% stake in three oxide copper properties hosting 5 million tons of 2.5% oxide copper. Known collectively as “Cuprita,” the properties lie on trend with Bolivia’s historic Coro-Coro copper belt where Asarco was active earlier this century.

Weeks before, Arimetco agreed to purchase a 52% stake in a Bolivian mine with probable reserves of 400,000 tons grading 10% zinc, 4% lead and 10 oz. silver. After proposing to assume management of troubled Breakwater Resources (TSE), Arimetco may attempt to apply the solvent extraction techniques it is using at two copper mines in the U.S. to treat zinc material at Breakwater’s El Mochito zinc mine in Honduras.

“It’s something we are definitely looking at,” said Arimetco Chairman Roy Shipes, who is still discussing with Breakwater creditors debts that include a $29-million project loan for a mothballed mine in New Brunswick. He indicated that the Latin American assets and two gold properties in Arizona will be spun off into separate companies to be wholly owned by Arimetco. His immediate priority is to turn Arimetco into a major copper producer by increasing cathode copper output at the company’s core U.S. mines to over 100 million lb. in 1994 from about 10 million lb. in 1991.

If he is successful, Arimetco could produce almost as much of the red metal as Metall Mining (TSE), Rio Algom (TSE) and Teck (TSE), which in 1992 should report 110, 109, and 127 million lb. respectively.

But the expansion hopes rest on the continued success of the solvent extraction, electrowinning techniques that Arimetco is using to mine low-grade oxide copper ore from the Yerington mine in Nevada and Johnson mine in Arizona.

By stacking oxide material considered “waste” by previous operators on pads and sprinkling it with weak sulphuric acid solution prior to electrowinning, Arimetco has been able to achieve a 70% recovery rates.

At a cost of US$5 million, the company has installed a 60,000-lb.-per-day SX-EW plant at Yerington to treat 44 million tons of stockpiled and open pit material grading 0.25-0.33%.

Over the next two years, Arimetco will dewater the Yerington pit and build a 15,000-ton-per-day sulphide concentrator to treat an additional 400 million tons of sulphide material grading 0.4%. “Once we have the permits, it will take about a year to pump out the pit,” said Shipes. He expects the concentrator to be operating by the end of 1993.

In addition, Arimetco is rehabilitating the old 30,000-lb.-per-day Yerington oxide plant to process 40 million tons of grade 0.22% from the nearby McArthur property held equally by Arimetco and Holcorp Gold Mines (CDN). Arimetco had originally intended to move the old plant from Nevada to Arizona and rebuild it on site at the Van Dyke property where reserves stand at 100 million tons grading 0.5% copper.

But Shipes is now negotiating with another Arizona company in the hope that it will treat Van Dyke solutions for a 6-month trial period that will allow Arimetco to decide whether or not to build its own SX-EW plant at Van Dyke. Shipes attributes Arimetco’s rising share price to some recent drill results at Ann Mason deposit near Yerington which indicate that the amount of stripping to be done before mining begins may be a great deal less than previously thought. Contained reserves at Ann Mason are estimated at 495 million tons grading 0.4% copper.

Having cut a 5-year marketing deal with Billiton Minerals of New York, Arimetco is expected to produce 32 million lb. copper this year at a cost of around US50-60 cents per lb.