A Visit to Nevada Copper
I’m just back from a weeklong trip around Nevada from one side to the other. I got to see half a dozen projects from various companies and I’m going to talk about them one at a time. I was with three of the most experienced geologists in Nevada and all they talked about was rocks. How boring! I was under the belief that there were only two kinds of rocks; ore and waste but they assured me there were a lot more than two.
I am of the opinion that the general market for resources is in much the same place as it was 14 years ago in the spring of 2001. Everyone hated gold and silver; shares were being given away if you could even make a reservation to sell. The stock market is as insane as it was in March of 2000. The Bond market is even more insane. I suspect they are both going to blow up. The XAU is actually up some 18% since the low six months ago. Markets never do what we think they are supposed to and the biggest number of people would be surprised by resources going up, the stock and bond markets going down.
My very first article about resources was written in May of 2001, two months before we even started 321gold. It is just as valid today as it was back then.
The first stop on our journey around Nevada was at the Pumpkin Hollow copper/iron project near Yerington, Nevada. The Pumpkin Hollow project is part of the Walker Lane series of gold and copper mines.
Anaconda operated the Anaconda Copper Mine in nearby Yerington from 1952 until closing down in 1978 due to the low price of copper, mining some 360 million tons of ore.
US Steel began exploration at Pumpkin Hollow for iron in the 1960s with over a 200,000-meter series of drill holes. With copper at $1.40 a pound, Nevada Copper (NCU-T) bought 100% of the project in 2005. The previous companies had already spent over $50 million on the project.
It’s a giant copper project with over 8.5 billion pounds of copper in various resources. There is an ongoing 22,000-meter drill program for the open pit portion of the project designed to turn what is now classified as waste into mineralization. With just over 80 million shares outstanding, that works out to over 105 pounds of copper per share. Or just over $.02 a pound. The company expects to release a Feasibility Study before the end of May.
In addition to the three drills on the surface, Nevada Copper will be starting an underground drill program in May from the 1900-foot level. The company plans a 7900-meter program to expand the high-grade zones within the current mineral reserve.
Nevada Coppers sees a 70,000-ton/day concentrator blending some 63,500 tons of open pit low-grade material with 6,500 tons/day of high-grade ore from the underground mine.
The mineralization at Pumpkin Hollow has an iron kicker. The company recently signed an MOU (Memorandum of Understanding) with a large steel company to attempt to exploit the 395 million ton iron resource grading 32.1%. The two companies want to determine if magnetite coming out of the copper tailings would be suitable for downstream iron ore processing.
Nevada Copper still had $33 million in the kitty as of the end of 2014 and has an unused $110 million line of credit. The company recently completed the 1900-foot shaft and is advancing the project to production. The time line for the mill calls for it to be complete in Q3 of 2016 and underground production of 6500 TPD to begin in Q4 of 2016. Nevada Copper expects open pit production of about 65,000 TPD to begin in Q3 of 2017.
As copper mines go, Pumpkin Hollow is high grade. The underground reserve measures 1.71% copper equivalent and the open pit shows .41% copper equivalent. It’s located in a mining town in a mining state with power, gas and water nearby. I’m not a big fan of base metals until China perks up again but Pumpkin Hollow will survive the cut and go into production.
I have no vested interest in Nevada Copper; I hadn’t even heard the name until I was on the project. I don’t own shares, they aren’t advertisers but I think if you like US located mining stories, they are a cheap call on the price of copper. Do your own due diligence.