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TABLE OF CONTENTS Feb 21 - 27, 2011 Volume 97 Number 1 - 0 comments

Curis reviving Florence ISL copper project

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By: Ian Bickis
Florence, Ariz. 2011-02-21

There isn't much to see at Curis Resources' (CUV-V) Florence copper project, consisting mostly of flat empty farmland, but that's the idea. 

For, newly-minted Curis plans to produce about 76 million lbs. copper a year for 19 years from the project that sits within the city limits of Florence, so minimal impact is important. 

The company's solution has been to advance an in-situ leaching operation at the site, where a weak acid solution will be pumped into the ground and a copper-rich solution pumped out. Once operational, the project will consist largely of hundreds of pipes sticking out of the ground, hardly higher than the nearby cotton fields.

Even if there were alternatives, Curis president and CEO Michael McPhie sees in-situ recovery as especially well-suited to the deposit, as the bedrock is extensively shattered and the deposit well-saturated. 

"The geology of this deposit is highly favourable to this extraction technique," says McPhie. "The copper is not inside the bedrock, it's on the fractures of the bedrock... all you're doing is getting the weak acid solution in contact with the copper that's on the fractures." 

The technique also proves to be very cost-effective. Curis expects to produce pure cathode copper through solvent extraction-electrowinning (SX-EW) at a cash cost of roughly US70¢ per lb., one of the lowest in the industry.

If all goes well on the technical side, the system could also prove fairly quick to implement, with trial production targeted for 2012 and full production by 2013. 

Possibly the most compelling reason for Curis going in-situ, however, and a big help to the timeline, is that the same project was entirely permitted, developed, and put into trial production by BHP Billiton (BHP-N, BLT-L) a little over a decade ago. Curis is basically implementing the decade-old blueprints.

The international heavyweight had taken on the project when it had acquired Magma Copper in 1996, which was already advancing the Florence project.

Together, the companies drilled roughly 176,000 metres in more than 500 holes at Florence. With that, they were able to establish an oxide resource of 389 million measured and indicated tonnes grading 0.33% copper for 2.8 billion contained lbs., plus a further 84 million tonnes grading 0.27% copper, both using a 0.05% cutoff. A large corrugated-steel hut still sits at the property filled with the old core.

BHP secured permits and started testing the project in 1999, but after a few months, shut down the operation entirely. Copper price had dipped to as low as US64¢ per lb., and the company had decided to phase out certain operations in the United States.

The 5.4-sq.-km property on the edge of Florence - just over an hour commute to Phoenix - then ended up in a large real estate company.

And there it sat. 

"The reason it wasn't developed in the mid-2000s when a lot of copper projects were under consideration," says McPhie, "is that it wasn't in the mining business, it was held within the real estate business. And of course, the tables have kind of turned now."

The Hunter Dickinson (HD) group, of which Curis is a part, came calling in 2007 once the bubble started to deflate.

"A few of the folks around here had been watching it for a while, and when we saw the owner of the property look like he might become a motivated seller, the HD group started speaking with him," says McPhie.

It took years to complete the deal, but Hunter Dickinson, through then-private Curis Resources, eventually secured the property for a total price of about $24 million in cash and what would be Curis' public shares, with the company having gone public last November.

Leading the new company, McPhie comes to Curis after serving as a director and executive vice-president of Exeter Resource (XRC-T, XRA-X), as president and CEO of the Mining Association of BC and as a senior director with Natural Resources Canada.  

Help on the technical front includes: Mel Lawson, vice-president of project development with 40 years of project development and operations experience; John Kline as a senior advisor with more than 25 years of experience, including work on the Florence project under BHP; Loretta Ford, who is pushing through the permitting as senior environment manager with 20 years of experience; and an experienced and diverse group of directors.

With the property and team in place, Curis is now working to get the Florence copper project into production.

Because BHP had already secured full permits for the site, Curis only has to update some while others are still valid. In either case, the process is much faster than starting from scratch. 

"We're not just submitting initial permits," notes McPhie, "we're actually submitting a full 20-year mine plan plus closure."

Further facilitating permitting, most of property consists of private patented land, and the rest is on a state lease so no federal agencies are involved. 

But because the Florence city boundary has actually grown to include the project since BHP had the project initially permitted, the municipality has to grant certain rezoning rights.

To help ensure local acceptance, and approval of the project, Curis has put together a full-time community relations team, established a downtown community office and is offering regular tours of the site. McPhie sees acceptance coming through education.

"We're carefully nurturing that relationship and we expect it will go just fine," says McPhie. "We expect to be asked a lot of questions, and we expect it will take some time for people to have confidence in us, but we think the science is strong."

The biggest challenge will be to convince locals that pumping 11,000 gallons of acid solution a minute under their aquifer won't jeopardize the water supply. 

Fortunately, the company has historic evidence to support its claims, and several safeguards as backup.

First, Curis touts in-situ mining as well-proven after decades of use. While rare in copper mining, the method is used in about 30% of uranium mining worldwide, and was used successfully by BHP to mine parts of the nearby San Manuel copper project.

The company will pump down the acid solution through a concrete-encased pipe, and then four similar pipes, surrounding the injection pipe in a diamond pattern, will bring the copper-impregnated solution back to the surface. The circular pattern alone should keep the acid isolated to where Curis wants it.

As a buffer, the company will drive the pipes 40 ft. into the copper-bearing bedrock, with that upper portion excluded from the resource. Above the buffer zone sits a roughly 70-ft.-thick lower basin fill unit that, as calcitic, would work to neutralize any acid. 

Above the fill unit sits a 20- to 40-ft.-thick clay layer that, while it should be unnecessary, would act as a final protective barrier to the aquifer sitting above.

To ensure the acid does not seep outwards, dozens of monitoring wells will surround the project. If ever there is a problem, the company can simply stop the process and flush the deposit with fresh water. 

"This is the beauty of a system like this," says McPhie, "is you can just turn it off."

The company points out that when BHP shut down operations, it flushed the deposit with water and effectively neutralized it, and in 13 years of subsequent water monitoring there has been no indication of groundwater contamination.

At the entrance of the Curis site office, there is a poster that sets out some of the advantages of an in situ project. In bold letters it states: no open pit, no tailings dam, no waste rock storage area, no smelters or significant air emissions, and no blasting or use of explosives.

To convince investors, much like the community, Curis has emphasized that everything being done at Florence is proven and tested.

"There's nothing cutting edge here, nothing unproven. It all works," said David Copeland, Curis director, geological engineer, and CEO of Continental Minerals (KMK-V), to a bus full of analysts and investors on a recent site visit. 

"We're going to move this project forward quickly and successfully," Copeland assured them.

Some investors have already taken note. Curis completed an oversubscribed $38-million private placement at $2 apiece last November as part of a reverse takeover of a Venture-listed capital pool company. It now has about 56 million shares outstanding and roughly 57.4 million fully diluted.

Only since the beginning of February, however, has the company actually been trading under its current name and ticker on the TSX Venture Exchange, though it soon plans to move to the main TSX board. On Feb. 1, the day of the name change, the company's share price climbed 24¢ to a new high of $3.20. 

While the company currently has about $18 million in cash, it will eventually have to raise a fair bit more, likely through the combination of debt, equity and possibly some forward selling of copper. 

The project is expected to cost US$237.8 million, with a US$150-million SX-EW plant taking up the majority of the cash. 

General infrastructure is already excellent, with a 500-kilovolt power line running next to the deposit, paved roads up to the site and a nearby active rail line.

An October 2010 preliminary economic assessment concluded that, using US$3 per lb. copper and tax inclusive, the internal rate of return was 39% and the net present value, with a 7.5% discount rate, was US$550 million.

The study, however, is based on copper recoveries of 49%, the lowest recoveries BHP achieved in trials. McPhie described the number as very conservative, with BHP achieving recoveries as high as 72%.

"One of the most tremendous upsides on this project is the ability to optimize that and get it closer to the much higher recovery levels," says McPhie. 

To that end, the company has initiated a large-core drill program for further metallurgical testing.

By year-end Curis hopes to have BHP's prefeasibility study updated, engineering optimized, full production permits in place, phase one of construction started, and the mine development plan initiated.

If all goes well, Curis could soon be producing copper in a state famous for it. As locals love to say, Arizona is known for "five C's": cattle, citrus, cotton, climate and copper. While some of those have fallen somewhat by the wayside, copper still looks promising. 

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Curis Resources' vice-president of project development Mel Lawson points to the Florence in-situ leaching copper project, 100 km southeast of Phoenix, Ariz. Photo by Ian Bickis
Curis Resources' vice-president of project development ...

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BHP Billiton
Curis Resources Ltd

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