TORONTO (miningweekly.com) – With the junior mining sector still stuck in the economic doldrums, companies using alternative funding models, or using existing financing routes with bolt-on revenue streams, deserve close attention. One such company is junior miner Equinox Copper. 

Initially, its main objective was to delineate and develop its Binghampton/Copper Queen copper (Cu) project in Arizona. To achieve this goal, but to avoid putting all its eggs in one basket, Equinox first decided to diversify and buy a small copper mine in Chile, and in April 2012, it acquired a property called Aura, in north Chile’s copper-rich Atacama region.

“At the time we acquired Aura, its output was being shipped to Enami, a state-owned toll-milling and processing agency. However, this was being done via a third party,” Equinox Copper’s director and CEO Corey Dias told Mining Weekly Online. “So our first task was to clear up the sales process, remove the third party and establish direct links with Enami.”

Much of the paperwork also had to be overhauled and new licences obtained. “It took us about two months in total to sort this out … we obtained the direct selling licence with Enami and, just before this, secured the exploration licences for Aura,” Dias said.

Having the right paperwork was critical. “You have to show your licences to Enami and clarify that you have the necessary rights,” he said. “But overall, Chile is very sophisticated as a mining jurisdiction. Yes there’s a lot of paperwork at the start, but you can be confident and comfortable knowing where you stand once this phase is complete.”

The company’s next goal was to bring Aura back into production and secure a modest revenue stream. In-depth exploration was put on the backburner. “We’re an underground operation and we’re not talking about giant deposits. Besides it doesn’t make sense to immediately delineate if you’re already tracking the resources and delivering output,” Dias said.

Follow the veins

The company’s geologist identified the necessary targets, assisted by many of the veins being visible at surface. “We’re following the veins, looking for both oxide and sulphide material … our geologist determines the most attractive veins as the ones we should be chasing,” Dias said.

“We then drill, blast, and separate the ore. That’s when it becomes clear what we have,” he added. “We’ve been producing since February, with 640 t shipped to Enami so far at a 2.3% head grade.”

This level of output would be considered tiny by many a significant mining company, but for junior Equinox it creates a vital and constant revenue stream. “Enami pays depending on grade and we’ve been averaging about 55% on the spot price [of copper]. Their payments are quick and consistent, being made every week,” Dias said.

While the current system works, Dias is nonetheless keen to start more detailed exploration at the 1 140-ha property. “I want to get a resource on the property; to get some drill holes put in and to conduct some electro-magnetic surveys,” he said.

Dias is also eager to expand Aura’s workforce, enabling the company to expand capacity. “Right now we have a team of five, which worked fine when we weren’t blasting, separating and shipping. But now that we’re shipping, we need to increase our manpower. Expansion will allow us to sustain a level of two loads a day,” he said.

“The plan is to go from being operational for five days a week to being operational for seven days a week, with one crew on, one crew off. This will give us an extra eight days production per month,” he added. “The extra manpower will also enable us to work on our other concessions at Aura.” 

Equinox said it wants to buy a truck and hire a dedicated driver to help reduce expenditure. “Our costs are probably about $32/t, with around $20 of this spent on truck and driver hire. Hopefully, we can use some of the incoming funds to buy a truck; this will immediately reduce this cost segment down from $20/t to about $2.50/t,” Dias said.

“Plus having our own truck and driver will give us the ability to control our scheduling. It also means we’re not reliant on external contractor,” he added.

From Chile to Arizona

The company’s Binghampton/Copper Queen (BCQ) project, in Arizona, was named after the two old mines that lie within its boundaries.

“Historically, the Binghampton and Copper Queen mines were never owned by the same company. They were shut in the 1920s and, while some exploration was done subsequently, they were never considered one entity. Equinox managed to pull both assets together,” Dias said.

“Binghampton produced about four-million pounds of copper grading 3.1% Cu. Copper Queen produced roughly 100 000 lbs at a 9.95% Cu. The previous owners were primarily focussed on the sulphides and left the oxides,” he said.

“A significant portion of the BCQ project is on private, patented land. This means we can move forward much more quickly than if we were on state or federal land,” he added. “We’ve found sulphides and oxides, the latter being less than 50 m to the surface. So the initial plan is to get a resource for the oxides first. We’re now considering a 16-hole programme.”

“You can also walk through most of the old workings, although we still have to dewater some of the lowest shafts, but it’s in pretty good shape,” he added.

In the meantime, the company is looking at other methods of financing, including equity and debt financing, he said.

“We’ll probably look to do a debt deal later on this year, which having the Aura operation allows us to do. Hopefully we’ll be able to raise another $1-million. Once this is complete, we can really start engaging with the BCQ project and get a resource. This will provide an invaluable metric to the street,” Dias said.