TORONTO (miningweekly.com) – Base metals miner Mercator Minerals on Wednesday released updated reserve and resource estimates for its flagship Mineral Park mine, in Arizona, saying that, despite the slight decline in both categories, the operation was assured of a mine life of at least 20 years.
At a 0.2% copper-equivalent cutoff grade, the operation had proven and probable sulphide reserves of 369-million tons grading 0.12% copper, 0.037% molybdenum, and 0.084 oz/t silver, containing 877-million pounds of copper, 273-million pounds of molybdenum and 31-million ounces of silver.
The updated reserve represented a decrease from the January sulphide reserve estimate of 389-million tons grading 0.14% copper, 0.04% molybdenum, and 0.08 oz/t silver, containing 1.1-billion pounds of copper, 310-million pounds of molybdenum and 31-million ounces of silver.
The company said the drop in tonnage and grading for both its copper and molybdenum reserves was the result of mining higher-grade supergene material over the past six years, the lower copper grade in the transition zone, and interpolation using a hybrid dataset incorporating drill holes and blast holes to model the new mineral resource.
The new mineral reserve estimate also incorporated updated operating costs, metal recoveries and metal prices of $2.60/lb for copper and $9.65/lb for molybdenum.
The new mineral reserve resulted in an estimated mine life of 20 years.
Mercator also released the expected production mine plan for the period from June 1 to December 31, 2018. During this time, the company expected total production of 255-million pounds of copper, 63-million pounds of molybdenum and 3.6-million ounces of silver.
"The updated mineral reserve and resource estimate confirms Mineral Park as a long life, large tonnage mine and provides more accuracy and predictability in our long-term and short-term mine planning. Given current metal prices, we have also designed an optimised five-year pit, which correlates with our production guidance and will maximise cash flows until the debt repayment and copper hedging programmes are complete,” president and CEO Bruce McLeod said.
Laurentian Bank Securities Equity Research mining analyst Christopher Chang said in a note to clients that Mercator’s 67-month operating guidance was in line with his estimates and should provide the market with greater comfort on the company’s production profile going forward, as Mineral Park’s mine plan had deviated considerably from its previously disclosed five-year plan, announced in October 2011.
“Despite the company’s materially improved understanding of the challenging Mineral Park orebody, the focus remains on Mercator’s stressed balance sheet. With declining copper and molybdenum prices, operational execution remains paramount, as we estimate the company could seek additional capital within the next three months,” he said.