Themac starts drilling New Mexico copper project

Newly minted copper explorer Themac Resources Group (MAC-V) has started an 18,000-metre drill program at its Copper Flat project, located 50 km southwest of Truth or Consequences, New Mexico.

Copper Flat is a past-producing copper mine that last saw mining activity in 1982, but only for three and a half months before copper prices tanked and the project became uneconomic. At least five other operators have tried but failed to put the property back into production since then, though Themac’s chairman, Aussie rich-lister Kevin Maloney, is confident he is the man for the job.

Maloney invested $10.2 million into the company earlier this year in order to finance the purchase of Copper Flat, acquiring 40 million shares at 25.5¢ each for his efforts as well as 40 million warrants exercisable for five years at 34¢.

Themac has optioned the project from ECR Minerals (MSC-L) and has so far completed a preliminary economic assessment based mainly on historical data. The porphyry copper-molybdenum deposit contains an estimated 97 million indicated tonnes grading 0.3% copper and 0.01% molybdenum, with an additional inferred resource that adds another 41.7 million tonnes grading 0.24% coper and 0.006% molybdenum.

The deposit is based around a breccias pipe currently defined at 400 metres by 183 metres with a depth of 305 metres, though opportunities remain to extend it at depth. Themac is also quick to point out previous operators did not historically assay for gold and silver values, providing further upside potential. The company says “gold and silver content of the deposit is evidenced by historical production and metallurgical test work,” noting the current drill program and reassaying of old core will help prove up any potential resource.

The drill program will involve some 47 holes completed to an average depth of 382 metres, consisting mainly of infill drilling intended to upgrade the historical resource to National Instrument 43-101 standards. Additional step-out drilling will also be carried out, including several holes testing “significant anomalies recently outlined by a major geophyisical program carried out earlier this year.”

Mining infrastructure already in place at the 1,200-hectare Copper Flat property includes a tailings dam, a largely prestripped open pit (Themac estimates its ration will be in the area of 0.38:1), power lines, water well field and pipeline, access roads, diversion channels and building foundations.

Themac says permitting for the project is already at an advanced stage, while a new prefeasibility study using information derived from the current drill program should be completed by the end of the year.

The previous study showed metallurgical recovery rates of 90.9% for copper and 55% for molybdenum over a 17-year mine life, with an estimated operating cost of US$1.41 per lb. copper. According to Themac’s chief executive officer, Barrett Sleeman, the mine was originally financed when copper cost US$1.50 per lb. and by the time production began the price had sunk as low as US66¢ per lb.

With copper now trading just above US$4 per lb., initial capital costs start to look enticing at just US$179 million. Sustaining capital of US$112 million is also required over the life of the mine, including a US$40-million mine closure cost.

Chairman Maloney made his vast fortune in the Australian mining services industry over the past two decades. In late 2010, Texas-based oilfield services conglomerate Oil States International (ois-n) bought Maloney’s mining accommodation provider MAC Services Group for A$651 million. Maloney’s family had a 52% interest in the company.

Themac also says it has now hired “substantially all key members” of the team it needs to develop Copper Flat. In May, it hired former BHP Billiton (bhp-n, blt-l) man Mike Anglin as executive adviser, after appointing his former colleague from BHP, Ken Pickering, as a director. This followed the appointment of former Quadra FNX Mining (qux-t) mine manager Ferol Baker as general manager, with Ed Fidler, also formerly of Quadra, taking the role of feasibility study manager. Finally, Ann Carpenter, former president and chief operating officer of Rob McEwen’s US Gold (uxg-t), will act as project director.

Thinly-traded Themac closed up 3¢ to 88¢ following the June 23 drilling announcement. The shares have a 52-week range of 13¢ to $1.50.