TORONTO (http://www.cementprocesscrusher.com) – Vancouver-based Quaterra Resources has completed its acquisition of properties around and including the old Anaconda copper mine, in Yerington, Nevada, and could get the project into production within five years, CEO Tom Patton said.
Patton was CEO of Western Silver when it discovered the giant Penasquito deposit, in Mexico, which has since been acquired and developed by Goldcorp into a giant gold, silver, lead and zinc operation.
The initial focus at Yerington will be on completing an NI 43-101-compliant resource estimate, which should be accelerated by the fact that the company has access to historic data compiled by Anaconda, until the mine closed in 1978.
After that, the company will move onto the usual prefeasibility and feasibility study work before it can make a decision to go ahead with development.
“But we think a five-year window is reasonable” to get to production, Patton said in an interview.
Quaterra was originally awarded the Yerington property in 2007 by a bankruptcy court, and has needed until now to complete legal, technical and environmental due diligence on the asset to the point where it was prepared to close the deal.
“The delay pushed back our schedule, but in reality the price of copper is a lot higher than it was when we made the deal, and we probably couldn't afford it today,” Patton commented.
The company already owns the Macarthur project, about five miles north of Yerington, and has a preliminary economic assessment under way on developing oxide mineralisation there, while also drilling for primary sulphide deposits.
“And the more we looked at Yerington proper, the more we liked it,” Patton commented.
“There was a large historic resource there, lots of potential, it was in the mining-friendliest state in the US and it looked like we could deal with the issues.”
The Anaconda Copper Company mined about 1,7-billion pounds of copper at Yerington during the 25 years it operated the mine, and discovered and partly delineated a large copper deposit, named Bear, north of the openpit.
The mine was closed because of low metals prices, but estimates based on historic data suggest there could be some four-billion pounds of copper resources in the area.
Last week, the mine's most recent operator, the Atlantic Richfield Co (ARCO), agreed to pay the US federal government $940 000 to help with cleaning up environmental damage caused by the mine.
Before closing the deal, Quaterra reached agreements with the US Environmental Protection Agency, Nevada state agencies and the ARCO, to define, limit and protect the company from existing liabilities on the property and allow access for exploration.
A subsidiary of Quaterra paid $500 000 in cash and 250 000 Quaterra shares and the company also agreed to a 2% net smelter return royalty capped at $7,5-million on production from any claims owned by Quaterra in the Yerington and Macarthur mine areas.
HISTORIC HOLES
Quaterra has access to about 760 historic drill holes from Anaconda that have been digitised and included in its database.
The firm has pencilled in two years to drill the property and complete a resource estimate, but will start by twinning about 15 holes in the Anaconda pit, and if they compare well with the historic data that could make a big difference in speeding things up.
“The bottom line for us is that we have to drill it first, and then we have to complete a preliminary study or a prefeasibility study, and then a bankable feasibility study and then a decision to mine, mine site development, commissioning, this all takes time,” Patton commented.
“But that having been said I think the timeline to production at Yerington is less than most other copper exploration projects at a comparable stage.”
The project will benefit not only from historical exploration work, but also the infrastructure associated with the old Anaconda mine, he said.
“It's a historic mining area, it's got excellent infrastructure, and I think in the reality of permitting today it is easier to permit a mine where there has been a mine already than starting out in a pristine area,” Patton commented.
LOOKING TO BUY NOT BE BOUGHT
Besides the copper prospects in the US, with Yerington foremost, Quaterra also owns 50% of a potential silver openpit project in Zacatecas, Mexico, for which it is busy working on a preliminary economic assessment.
The group also has some exploration joint ventures in the US with Freeport-McMoRan Copper & Gold, the biggest publicly-traded copper miner, as well as a strategic alliance with Goldcorp on more than 1 000 square miles of land in central Mexico.
“And of course that's where the Penasquito deposit was discovered,” Patton said. “It's a great place to explore.”
The company is looking at acquiring more assets, and is evaluating “a lot” of opporunities, he said.
But it does not view itself as a takeover target, and, with some $17-million in the bank for exploration, is looking to attract buyers or offers.
“We don't think it would make sense for us to do a deal now,” Patton said.
“I guess our stock answer is we are going to go as far as we can, as fast as we can, until someone gives us a compelling reason to stop.”
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