Copper Exploration
Restarting past producing mines and creating value through new discoveries
There is a reason why Arizona has been awarded the title of “Copper State”. If it were a country, the state would be the seventh largest copper producer in the world. Arizona has one of the highest amounts of copper reserves in the US, which has attracted a plethora of exploration companies, searching mainly for porphyry copper deposits and volcanogenic massive sulfide copper.
As with other commodities, the price of copper has been volatile since the pandemic. In the first quarter of 2022, prices for the red metal hit an all-time high, trading above US$5.02 per pound (lbs). As of October, a global energy crisis centered in Europe, a slump in China – particularly the crucial property and construction sector – inflation, fears of recession in the US and a surging dollar have forced contributed to a moderate decline in copper pricing.
Still, market experts, producers and explorers remain bullish on the long term, particularly thanks to copper’s central role in the green energy transition. “We are currently seeing a temporary recession of the global economy. However, we are bullish on copper in the long term. Its price will increase considerably due to the lack of supply: today, there are few new projects, and we need much more copper for EVs, electrical networks, and the green economy in general, which is where the world is heading,” commented Javier del Río, vice president for South America and the US at Hudbay Minerals.
“The next project we will drill is South Bullfrog, in the Beatty District in Nevada. The Beatty District has completely changed in the last five years, as almost 10 million ounces of new gold discoveries have been made and three new mines are slated to be in production by 2024. Today, even majors such as AngloGold Ashanti, Kinross, Coeur, and Augusta Gold are doing grassroots exploration there.”
Adam Melnik, CEO, Zacapa Resources
Renewed interest in copper led many exploration companies in Arizona to increase their focus on restarting past producing mines, as this can often expedite the development process. One of the companies following this model that has been attracting a lot of attention is Arizona Sonoran Copper Company, which closed its initial public offering in November 2021 on the TSX and listed on the OTCQX. Arizona Sonoran owns the Cactus mine asset, a former producing open pit mine in the 1970s and 1980s. Recently, Rio Tinto joined Arizona Sonoran as a shareholder, considering that the Cactus mine asset has good potential to go into production soon, as it already has many permits in place, including the right to take water from the ground for the next 50 years from an industrial-use only aquifer approximately 2,000 feet below surface.
Within the Cactus asset, 1.3 billion of the 3.5 billion lbs of copper is contained in a primary sulphide (chalcopyrite). Because the copper concentrator was removed with the historic closure of the mine, Arizona Sonoran’s proposed plan is to restart production of the oxide and enriched leachable material with a SXEW plant using a heap leach operation, but there is no commercial technology today that can leach the copper from a primary sulphide. That is why the Rio Tinto group of companies created a subdivision, Nuton, which has developed a technology allowing for the leaching of a primary sulphide under a commercial application.
George Ogilvie, principal engineer, president and CEO, elaborated on the company’s upcoming plans: “Arizona Sonoran will complete a pre-feasibility study on the Cactus project, which will then lead to a bankable feasibility study in 2023, with the goal to put in place the project financing to start construction and development. Given that it is a former producing mine with a relatively low capex and significant permits already in place, we would like to see this asset come into production in the next two to three years.”
Another company that has been looking at restarting past producing mines is Eagle Mountain Mining, an Australian listed exploration and development company with the aim of becoming a low emission producer of copper to supply the rapidly growing green energy market. The company’s key property is the Oracle Ridge copper project in Arizona, which was historically in operation in the 1990s.
Eagle Mountain has recently been expanding and upgrading the amount of resource and has applied for a change of status for taking the project from abandoned to non-producing as it plans to undertake exploration drilling from underground. The company has also reached a significant milestone when Pima County granted a mine air quality operating permit, and the ADEQ approved an aquifer protection permit. “The existing infrastructure and approved permits will reduce capital costs and the time required to re-start potential production. To put the mine in operation we will have to re-construct the mill. However, given prior production at the project produced high-quality concentrate, this aspect of the restart is largely de-risked,” explained Manuel Ramos, CEO of US operations.
Meanwhile, Copper Fox Metals, a North American focused copper exploration company with two development projects and an exploration project in British Columbia, has two exploration projects in Arizona. The Van Dyke project in Arizona is a past copper producing mine that was twice permitted for in-situ copper recovery. In 2020, the company published a PEA, which reflected an after-tax net present value of the project from US$149 million to US$645 million. The economic analysis is based on US$3.15/lbs copper at a discount rate of 7.5% annual production of 85 million lbs/y of copper cathode, and an increase in the mine life from 11 to 17 years.
In Arizona, Copper Fox owns two exploration projects in the Laramide copper province, an area that has been mined for copper for well over 100 years and hosts a substantial number of large copper deposits such as the Resolution copper deposit. Here, the company is focusing on new discoveries rather than past-producing mines. “Copper Fox considers these projects to have excellent potential to host porphyry copper deposits. For example, at Mineral Mountain the porphyry target is approximately 4,500 meters (m) long by up to 2,000 m wide, and at Sombrero, the target is approximately 3,000 m long by at least 800 m wide,” stated Elmer B. Stewart, president and CEO.
Infinitum Copper is also trying to create value through discovery and exploration. The company started trading on the TSXV on March 16th, 2022, and on the OTC in April. So far, Infinitum Copper has two projects in its portfolio, La Adelita in Sonora (Mexico) and Hot Breccia in Arizona, but plans to build additional opportunities moving forward.
“There is approximately 18 kilometers of existing underground development at the Oracle Ridge project, mostly surrounding the main resource areas. To do this development today would cost close to US$100 million, and we are fortunate to have an asset with rapid restart potential at very low capital cost for mining. The mine is still in good condition and does not need dewatering.”
Tim Mason, CEO, Eagle Mountain Mining
Infinitum’s flagship La Adelita is a project that has been sheltered from extensive exploration, with less than 7,300 m of drilling in total on the property in the past. “We have several brand-new showings that we discovered in this exploration season, and we can tell from the geographic distribution of these showings that the overall system is several kilometers (km) in dimension,” explained Steve Robertson, president and CEO.The company has already reached some encouraging results: “We have started to drill in the best-known area on the project, a high-grade copper silver skarn, and made a brand-new discovery at the south end of the property called Las Trancas, where we uncovered a trench that is over 9 m at about 16.5 grams per tonne (g/t) gold and 2% copper,” Robertson revealed.
Another promising asset is Faraday Copper’s Copper Creek flagship. According to Paul Harbridge, president and CEO of the company, the copper-molybdenum porphyry with associated high grade breccias is one of the largest undeveloped copper resources in the US, with 3.9 billion lbs of contained copper in Measured and Indicated Mineral Resources. The company recently released a new mineral resource estimate for the Copper Creek project, which, along with the pending results of its recently completed phase 1 drill campaign, will form the foundation of a PEA that is expected to be delivered at the end of Q2 2023. “The project has the potential to be a combined open pit and underground mining operation that could last 30 years and provide many years of domestic copper production for the US,” Harbridge stated.
A relatively new player to the copper exploration space in southwestern USA is Zacapa Resources. Zacapa was established during the depths of the Covid-19 pandemic, as it’s founders noticed that several major mining companies in the southwest, like Freeport-McMoRan or Rio Tinto, were focusing on cashflow and brownfields and were therefore releasing a lot of their good assets and people. Understanding the need of being countercyclical, Zacapa built its own team and consolidated several assets during this time and closed its IPO in early 2022.
Zacapa has five exploration-stage projects that the company is progressively moving through its exploration pipeline. It has started with its highest conviction porphyry copper project called Red Top in Arizona, in the heart of the state’s Copper Triangle. Zacapa optioned this project from EMX Royalty Corp. and then identified a very interesting expression of advanced argillic and pyrophyllite alteration at surface.
“I have been exploring in Arizona for 27 years, and I continue to find signs of new deposits here. There remains the opportunity to discover deposits in spite of 120 years of copper exploration and production, as most of the surface of the state is invisible, covered by sand or rocks.”
Timothy Marsh, President and CEO, Bell Copper
Zacapa discovered veins that are commonly associated with a porphyry deposit, as well as abundant manganocrete and ferricrete at surface, which meant there were sulfides that had been mobilized by groundwater. Zacapa drilled six holes testing what geologists believed to be the potential core of the porphyry system. “Our plan for Red Top is to integrate the drill hole assays, geophysical, geochemical, mapping and remote sensing data and then make a decision on the path forward,” stated Adam Melnik, CEO.
Next, Zacapa will drill South Bullfrog, one of its two gold projects, located in the Beatty district of Nevada, where four geophysical surveys and a raft of geochemical and interpretation work have helped establish drill targets.
Finally, Barskdale Resources is a base metal exploration company that has been gaining a lot of attention from investors, being one of the top five copper junior stocks in the TSXV during H1 2022. Barskdale owns two projects in the Patagonia region in Arizona, Sunnyside and San Antonio, as well as assets in Mexico. According to president and CEO Rick Trotman, the Patagonia region is unique due to its intact nature and potential for non-dismembered porphyry copper deposits.
At Sunnyside, which is a porphyry project, there is 0.5-1 billion t of potential mineralization, and the company is currently applying for a permit to explore the project. “This will be the catalyst for us and kick off a wave of exploration that will last at least 5 to 7 years,” Trotman said.
Barksdale’s second project, Sun Antonio, is located a few km from Sunnyside. The company will drill the project in the fall to determine if there is a porphyry deposit there and find out if the project is worth going through all the legal permitting procedures, which is expected to take a couple of years.
Mineral exploration plays a vital role in ensuring the long-term viability of the US mining industry. The road to address a demand gap that will keep growing starts with exploration.