Arizona Copper Alternatives
Apr 15, 2014
When the history books have been written about the early years of the 21st Century there will be a lot of commentary about the remarkable stupidity and perhaps incredible insanity of the actions of countries around the world.
The United States found it desirable to fight senseless wars for “Democracy” in Iran, Iraq, Afghanistan, Pakistan, Syria, Somalia, Sudan and Libya. While Israel may feel these wars were in their best interests, it hardly has served the interests of Americans as we have lost every war.
The US started off 2014 by goading the Russian Bear in Ukraine, bragging about having spent $5 billion in 20 years to advance “Democracy.” A sane person would have to ask, just how did they spend that money, is democracy something you go down to the local Wal-Mart to purchase?
Having never read a single history book, the Neocons chortled with glee when their paid thugs overthrew the democratically elected government of Ukraine. Two weeks later the citizens of Crimea voted democratically to join Russia. The US has been whining ever since about the unfairness of citizens demanding to determine their own fate.
In Ecuador the government stopped in its tracks a giant gold mine that could have brought both employment and taxes to their 3rd world poverty stricken country. Kinross took a $2 billion dollar hit when the government demanded a 70% windfall tax that would make the project a roach motel for every dime Kinross invested in the country.
In Peru, the governor of Catamarca Province is attempting to extort a bribe from Newmont before he will allow the company to advance the $5 billion giant Conga Mine, the largest private investment in Peru’s history. Newmont has put the project on hold.
In Chile, the government has stopped the $8.5 billion mega-giant gold project of Barrick Gold at Pascua-Lama in the name of fixing environmental issues. Barrick has put the giant project on hold. The mine would have been one of the largest sources of tax revenue in the country.
China has been responsible for much of the explosion in commodity prices over the last 15 years as the country transitioned from an agrarian society to a consumer society. Without question, the rate of growth is slowing in China as copper and iron prices are down from their highs. Copper is down some 33% from the high of about $4.50 in 2011. Projects seen as economic then are clearly uneconomic now.
That doesn’t mean mining copper will be unprofitable, it means only the high-grade, low-capex projects are going to advance.
So between the insanity of governments and slowing prices, it’s vital that investors put their money into companies that at least stand some chance of making money. And while I think the US government is as insane as any on earth, you can still mine at a profit.
I just got back from a few days
trip to Arizona where I saw two really interesting copper projects right in the midst of the most prolific copper producing areas in the US. I visited three of the five projects optioned by Desert Star Resources (DSR-V) near the Globe-Miami copper district in South Central Arizona.
realize it but Arizona produces over 60% of all the copper mined in the US. The Globe-Miami district has more than ten active or past producing copper mines.
I’ll take the three projects we saw in order. They are three of the four Laramide porphyry copper projects Desert Star has done deals on between March and September of 2013. In addition, DSR picked up one drill-ready Carlin-style gold project in Nevada.
DSR did a deal with Eurasian Minerals (EMX-V) on a project they call Copper Springs in 2013. Copper Springs is located in between the cities of Miami and Globe and due south of a cluster of high-grade copper mines. The exceptionally qualified geos of both Eurasian Minerals and Desert Star believe Copper Springs is the untested core of a sideways tilted giant copper porphyry. There are three copper trends in the Globe-Miami district. Copper Springs is in the southern most northeast-trending core zone. It’s under cover and has never been drill tested.
The agreement between Desert Star and Eurasian provides for DSR to acquire 100% of the project based on a series of payments and exploration expenditures and a 2.5% NSR. It’s a little complicated and any readers seriously interested should go here to read it.
In short, the agreement is biased toward both serious exploration and development. That’s good for both companies because the theory is either true that it’s a major dismembered copper porphyry or it’s not. It is to the advantage of both companies to prove or disprove the theory as soon as possible and that’s how the deal is structured. With a few holes, Desert Star will have a real good idea of just what is down there.
The next project we went to see was the Red Top Project called that because, well, it has a red top. Mapping of Red Top shows a 350-meter by 250-meter area of intense alteration known as a lithocap. Company geos believe they have the roof of a porphyry copper system similar to that of the Resolution Mine just 8 km south. The Resolution Mine has a resource of 1.7 billion tonnes at 1.53% copper.
Red Top shows porphyry-style alteration right at surface. Again the details of the JV between Eurasian and Desert Star are a little complicated so if you are interested, go here. A few holes will prove or disprove the concept.
The third project we saw and again subject to a JV between Desert Star and Eurasian was the Copper King Project. Copper King is only 5 km from the high-grade Resolution Mine. Copper King resembles Resolution but isn’t buried under 1 km of cover rocks. The surface alteration footprint is very similar to the 1% copper shell at Resolution.
We didn’t see the Oro Project located in Western New Mexico but did get a brief from Desert Star. The company wants to drill two 500+ meter holes into the alteration halo. This project is subject to a 70/30 JV with Southern Silver calling for exploration expenditures of $6 million and certain cash payments to Southern Silver.
The Desert Star story is quite simple. They have four highly potential targets right in the midst of elephant copper country. They need a couple of million to drill test all four targets. The company is talking to a number of majors about investments in copper exploration right in their back yard. All of us on the tour were quite amazed that DSR could find high potential targets right next to big copper mines.
DSR President Vince Sorace has assembled a number of great projects with partners who want to see exploration done now. His technical team is 1st class and did a wonderful job of explaining in simple terms just how good the projects are. For a relatively small amount of money, the company can prove or disprove a lot of ground. Vince has two choices, he can get in bed with a major and that’s what I’d like to see or go to the marketplace. Two or three years ago, the $2-3 million necessary to drill test these targets could be found with a phone call. The market is not so simple today.
I’m convinced he will find the money and there will be significant news out soon. With a market cap of under $6 million, investors risk pennies to make dollars and that’s always an easy decision.
The next visit was to a story that is remarkable only in that you have to smack yourself in the head and wonder why it isn’t already in production.
There is a copper project called Florence Copper near the town of Florence, Arizona, owned by one of the Hunter Dickenson companies named Curis Resources. (CUV-T) The copper project was first discovered and drilled off by Conoco during the 1960s and 1970s. To date, over $100 million has been spent developing the project. And while the project contains both oxide copper and sulfide copper, it is being developed as an in-situ leach copper project solely for the oxide copper. A 99.5% water based .5% sulfuric acid solution will be dripped through the oxide portion of the deposit before being pumped to the surface for SX-EW processing to produce sheets of pure copper.
BHP Copper advanced the project in the 1990s to a fully permitted stage BHP actually drilled the injection wells and had a tiny test facility but copper prices at the time didn’t justify full-scale production.
Curis/Florence Copper bought the project from a local developer in 2010 for about $27 million total. A PEA released in late 2010 showed 23.3 billion pounds of copper in an oxide resource using a .05% cutoff. Using a base case number of $2.50 for copper, a 19 year mine life would produced 1.2 billion pounds of copper with a 30% IRR. At $2.75 copper the NPV is $503 million. Upping the copper price to $3 would up the IRR to 39% and NPV to $585 million.
No silver lining is found without a surrounding cloud. Local developers and a 76 year-old local mayor have tried to halt production at the mine and have managed to cost the company millions of dollars in expenses while ignoring the life-of-mine taxes of $660 million dollars.
The opposition to the mine reflects a common sort of corruption in America today. I’ve been to the project and seen the test wells. This sort of mining is the least obtrusive way to mine anything. If you didn’t know better, it would look like a busy water well field and it’s not much more than that. Government is so overreaching today in the United States that the fools running the government have forgotten that all wealth originates in either mining, manufacture or agriculture. Everything other than that, including the cost of government, is simply moving real wealth around.
The two-hour briefing from company President Michael McPhie gave the best and shortest brief I have ever had. He and his staff had every number at their fingertips and told us 100% of what we needed before feeding us and speeding us on our way.
Curis is selling at perhaps 10% of their real value. This project should have and would have been in production years ago without the constant interference from a small group of local clowns bent on lining their own pockets and the ineptitude of the EPA taking years to review what they have already approved in the past. I can only hope that when the Greater Depression sinks in and some of the fools currently in government are run out of town after being tarred and feathered, it occurs to someone that something has to be produced at a profit for anyone to skim money off the top.
With a market cap of just over $62 million, Curis has a lot of potential once the EPA gets around to doing their job. The nuisance suits from the town are nothing but a nuisance; the company has plans for developing the 160-acre state land portion of the project first. If in some distant universe far far away, the local clowns manage to stop production on the town portion of the project, the next job for the major will be to find $400 million from the town coffers to repay Curis for lost profit.
I have talked to Desert Star about advertising and they probably will. I don’t even want to bring it up with Curis because it would be of far more benefit to them once the final EPA permit is in hand. It’s 6 months overdue already but you don’t dare ask any government agency to do their job.
I am biased, they are both interesting and potentially profitable projects. Desert Star can prove any of their four top projects up for a couple of million dollars and I think they will have the money shortly. When they do, you should throw money at the company. I feel bad for the people at Curis. They are all dressed up and have nowhere to go until the EPA permit comes in. But once that happens and you want copper profits, they will be an excellent near term miner. At the very least, the staff knows more about in-situ copper leaching than anyone on earth and I would bet there are other suitable projects on their wish lists.
Desert Star Resources
DSR-V $.215 (Apr 14, 2014)
IAXFF-OTCBB 29 million shares
Desert Star website
Curis Resources Ltd
CUV-T$.81 (Apr 14, 2014)
PCCRF 74.7 million shares
Curis Resources website