TORONTO (miningweekly.com) – Toronto-listed project developer EMED Mining was part of what might very well be a renaissance of European mining, as it was preparing to restart mining at its flagship Rio Tinto copper mine, in Spain’s region of Andalucia.

The Europe-focused miner told Mining Weekly Online on Monday that European mining was finally coming out of decades of hibernation.

EMED MD and CEO Harry Anagnostaras-Adams pointed to new attitudes forming in Europe, which were more accepting of the benefits that large-scale mining could bring to resource-rich communities, and customers seeking to secure new sources of resources while looking to sidestep imports.

“By restarting the Rio Tinto mine, EMED would contribute to a watershed moment in unlocking a new strategic opportunity in the European Union. This was such a glaring opportunity, and in such a strong copper market, it is still surprising me that the Rio Tinto mine was not restarted years ago,” Anagnostaras-Adams said by telephone from Spain.

Miners who sought to develop projects in remote outposts of the globe were increasingly facing randomly changing mining laws, onerous windfall taxes and militant protests from organised workers. It was today hard to find an emerging jurisdiction in which mines were operating smoothly.

EMED’s project, which gave birth to mining giant Rio Tinto, is located in the Iberian pyrite belt, 65 km north-west of Seville, Spain. The openpit mine and processing facility had been on care and maintenance since mining ceased in 2000, owing to low copper prices of less than $1/lb at the time.

EMED was granted an option to acquire the operation in May 2007, and it was subsequently acquired in October 2008.

Also located just 20 km from Seville, base-metals miner Inmet Mining has for the last three years been operating the Las Cruces copper mine, host to some of the mining industry’s highest grades, which has been a huge boon to Inmet.

The Rio Tinto project was also located about 75 km from Freeport McMoRan’s Atlantic copper smelter and a major seaport.

Anagnostaras-Adams said the company was now on the home stretch to begin construction of the project by the end of the year, with first production slated for the third quarter of 2014.

With more than 3 000 years of mining at Rio Tinto, there were substantial legacy issues EMED had to deal with, both with regard to the historical environmental damage and the cultural heritage stretching from antiquity.

The natural conditions of the area consist of bare waste materials, acidic water and an antique mining infrastructure, as well as re-usable infrastructure.

REGULATORY APPROVALS

The restart of operations at Rio Tinto could, however, only proceed after a number of regulatory approvals had been received, and the company raising the necessary funds.

The main regulatory approvals still required were the approval by the Junta de Andalucia of the transfer of mineral rights to EMED subsidiary EMED Mining Tartessus, and approval of the restart, operating and rehabilitation plans, all of which were based on long-standing and previously approved practices at Rio Tinto mine that were being updated as appropriate.

In April the Andalucian government had cleared all economic, technical and legal capacities for administrative recognition of the company's mineral rights for the project, except for civil works on the tailings dam.

This meant the government was progressing the permits required to start site works, which included finalising administrative standing and the environmental plan, subject to receiving a preliminary report from the national civil works technical review agency Cedex supporting the proposed conditions to be applied to tailings management.

Despite this not being final approval, it seemed as if the company’s long permitting journey was nearing its end.

Investigations for the report were completed during the first quarter and the report was due in May.

The report would focus on critical tailings issues such as the restriction of the existing dam to previously permitted heights, the future use of high density tailings to reduce water on the tailings deposit, the method of sealing the surface of tailings deposits at closure and the holding capacity to support production plans.

Environmental approval for the operation was also still pending.

RESOURCE CHARACTERISTICS

Anagnostaras-Adams said the aim was for the project to produce about 37 000 t/y of copper in concentrate, based on processing nine-million tonnes of ore a year.

A National Instrument 43-101-compliant technical report completed by Behre Dolbear in November 2010, had placed a base-case net present value of $654-million on the project, using a price of $3.50/lb copper.

The project had total expected cash costs of about $1.57/lb, including all operating, capital and acquisition expenses.

The Rio Tinto mine currently had proven and probable ore reserves totalling 123-million tonnes at 0.49% copper for about 610 000 t of contained copper, at a cutoff grade of 0.2% and measured and indicated mineral resources of 203.1-million tonnes at 0.46% copper, for about 930 000 t of contained copper at a cutoff grade of 0.2%.

Anagnostaras-Adams said the project had ample opportunity to extend the current expected 14-year mine life by converting more resources to reserves, and had potential for higher grades once operations started targeting underground reserves later in the mine plane.

“What makes the Rio Tinto mine particularly attractive is the significant concentration of precious metals in tailings, which we would also target for retreatment,” he said.

Anagnostaras-Adams said EMED had, to date, allocated about half of the mine’s base production to offtake partners that were interested in playin a financing role to redevelop the mine.

He pointed to a $75-million loan offer from Goldman Sachs in return for metals streams, and smaller financings of about $15-million agreed to with Chinese copper smelting, refining and processing group XGC Group and Red Kite Capital Management of New York and London.

EMED had already secured debt capital funding of $225-million. The total capital cost to restart production was estimated at about $200-million. Thereafter, capital expenditure of $52-million would expand the project’s milling rate from five-million tons a year to nine-million tons a year by the beginning of the third year and $23-million of sustaining capital would be sufficient for the life of the mine.

The company’s stock was on Monday offered at C$0.15 apiece on the TSX.