Rosemont: Mine site is richer The proposed Rose

Rosemont: Mine site is richer

The proposed Rosemont Mine's mineral deposit has about 34 percent more of its most common form of copper resources than previously thought, Rosemont Copper's Canadian-based parent company says.

While Augusta Resource Corp. isn't ready to say how this larger estimate would affect Rosemont's operations, an analyst said it could extend the mine's life somewhat, perhaps by as many as seven years beyond its current, 20-year estimate.

A longer mine life would have to be taken into account when the U.S. Forest Service prepares its final environmental impact statement for the proposed mine in the Santa Rita Mountains southeast of Tucson, said Coronado National Forest supervisor Jim Upchurch.

Augusta's new estimate is about 919 million tons of "measured and indicated" copper sulfide resources, 232 million tons more than previously thought. The resource's grade is about 0.41 percent actual copper, Augusta, of Vancouver, British Columbia, said in a news release last Tuesday. The company's estimate of copper oxide remains the same as before: 63.1 million tons, at a grade of 0.17 percent copper.

Rosemont Copper greeted the news exuberantly on its Facebook page.

"Eureka! Our latest exploratory deposit report found a 34% increase in Rosemont sulfide mineral resources," the Facebook message said. "More to mine, more dollars for Tucson. Let's get to work!"

Augusta will provide details soon about how this larger deposit could affect the mine's life and annual copper production when it releases an updated feasibility study for the mine, said Letitia Cornacchia, Augusta's vice president of investor relations and corporate communications.

To update its resource estimates, Augusta used a total of 266 drill holes, 342,700 feet of drilling in all, including 12 recently drilled holes, the company said. The company contracted with Moose Mountain Technical Services of British Columbia to conduct the updated resource estimate.

Augusta pointed out in its news release that "mineral resources" that aren't actual "mineral reserves" don't have demonstrated economic viability. That statement is standard language, required for legal purposes, that should be included in all mineral-resource estimates, Cornacchia said. The company will be able to claim actual mineral reserves when its feasibility study spells out the project's updated economics and profitability, Cornacchia said.

Christopher Chang, a Toronto-based analyst who follows Augusta, says there's a good chance the larger deposit will extend the mine's life, perhaps by seven years. But the bigger deposit won't affect his estimates of the project's dollar value because that extension period is so far away.

Given inflation, "A dollar in 30 years is pretty much useless today" in estimating value, Chang said.

Overall, it's not a "game-changer" for the company, Chang said. Many copper experts have placed a high value on the quality of the Rosemont copper resource. But Rosemont Copper has struggled for five years to get the mine permitted in the face of intense opposition from some sectors of the local community and strong support from others.

"It's a nice thing. It improves the confidence in the resource, from a lower level to a higher level," Chang said of the upgraded resource estimate. "I don't think anyone would ever question the quality of the resource. It extends the life of the resource, but it's not like a new discovery."

Tom Purdon, a board member of the Rosemont opposition group Save the Scenic Santa Ritas, said Augusta's announcement of the upgraded mineral resource was timed suspiciously, coming one day after the Web-based stock analyst Portfolio Grader downgraded Augusta's stock from a D to an F and gave it a "strong sell" rating.

Resource or reserve?

• Mineral resource: A concentration or occurrence of minerals or metals in or on the Earth's crust in enough quantity and in the proper form to give it reasonable prospects for economic extraction.

• Mineral reserve: An economically mineable part of a mineral resource, as determined by at least a preliminary feasibility study.

• Measured mineral resource: The part of a mineral deposit whose amount, grade or quality, densities and other physical characteristics are so well established that they can be estimated with enough confidence to support the evaluation of the deposit's economic viability.

• Indicated mineral resource: The part of a mineral deposit whose characteristics can be estimated with enough level of confidence to support a similar evaluation to a measured resource. Similar to a measured resource, but the estimate isn't quite as certain.

Source: Canadian Institute of Mining, Metallurgy and Petroleum

Contact reporter Tony Davis at tdavis@azstarnet.com or 806-7746. Follow Davis on Twitter @tonydavis987