When Hudbay Minerals (TSX: HBM; NYSE: HBM) acquired Augusta Resources in September 2014 the key objective was to advance its Rosemont copper project, which if put into production will be one of the largest copper mines in the United States.
But the acquisition also brought with it a package of patented mining claims on private land within 7 km of the open-pit project, which held about 20 small pick and shovel underground mines that had operated between the mid-1800s and mid-1900s and produced about 440,000 tons of copper at an average grade of 4.42%.
“When we took Augusta over we were most keenly interested in the half-billion-tonne Rosemont project, but also knew they had identified and knew about some of these what we’d call satellite opportunities for copper in a historic district,” says Cashel Meagher, Hudbay’s senior vice president and chief operating officer.
“The district was then known as Helvetia, but Augusta had identified three potential resources, Broad Top, Copper World and Elgin Peach, so we knew the exploration targets were there. We knew they were future opportunities, but at the time our primary focus and concern was Rosemont itself, redoing the feasibility study and moving that through to production, and knowing that those exploration opportunities would come after our focus on developing Rosemont itself.”
With Rosemont currently suspended due to legal challenges over its plan to put some of the project’s mining infrastructure on federal land, the time seemed right to kick off exploration in the area and at the same time make sure through condemnation drilling for water and power pipelines for Rosemont wouldn’t be built over prospective geology.
“While we’re waiting for Rosemont to be decided in the ninth circuit in the court of appeals we felt this was an opportunity to evaluate these targets we always knew existed,” Meagher says. “With respect to the lawsuit, our view is that since the mid-1800s the mining laws of the U.S. have supported the use of federal lands for mining infrastructure, and we believe that in the Ninth District our appeals will be upheld.”
In the meantime, the 20-odd historic mines on the property about 7 km from Rosemont, signaled there was “smoke,” he says. “There was definitely good mineralization to justify mining so many mines. We wanted to see if we could compile the data and see if the mineralization could be linked to suggest there’s an economic modern-day mine in the district and our initial exploration drilling suggests there is.”
Meagher says the team has identified what they believe is a continuous arc of mineralization over 5 km of strike with four areas of mineralization – Broad Top Butte; Copper World, and Peach and Elgin – collectively called the Copper World project. (The company has also renamed the historic name for the district from Helvetia to Copper World.)
The Rosemont deposit sits at one end of the mineralized trend, Meagher explains, with Broad Top Butte to the north. The trend then continues northwest from Broad Top Butte to Copper World, and then westward towards Peach and Elgin.
“While they all have distinct names and while there are 20 separate historic mines in there, we believe it’s one mineralized trend,” he says. “We believe geologically there is continuous mineralization in an arc from Rosemont right through to Peach in the northwest, over a distance of 5 km.”
Results from the first 4,572 metre drill program last year were encouraging enough to add another 12,192 metres and double the number of rigs to six in November. In January Hudbay budgeted for an additional 21,336 metres.
Highlights from the drill program released on March 29 included drill hole 11 at Broad Top Butte that returned 134 metres of 1.38% copper starting from 111 metres and drillhole 12 that intersected 75 metres of 0.70% copper from surface. Drillhole 3 at Copper World cut 64 metres of 0.38% copper from a depth of 1.8 metres. At Peach, drillhole 35A returned 0.82% copper over 152 metres from surface and at Elgin drillholes 53 and 55 returned 85 metres of 0.71% copper and 30 metres of 0.88% copper, respectively, both from surface.
“We’re focusing in on higher grade surface locations, which would be amenable to open pit mining and provide good opportunities for either standalone mining and permitting, or maybe in the future, could be a contributor to the Rosemont mine itself,” Meagher says.
“What’s important to understand is we’re in a mineralized system — this is a copper system — and we have sulphides and oxides. The Rosemont proposed pit is mainly a sulphide ore body on what geologically we call skarn in nature — we don’t actually have a large portion of porphyry mineralization in it — so there’s a larger porphyry somewhere that is providing the mineralizing fluids to the area for this mineralization that we’re encountering. While we know there’s a billion tonnes of resource at Rosemont, these other exploration targets are also yielding good economic intersections.”
Moreover, while the mineralization at Rosemont is predominantly sulphides, the new areas appear predominantly to be oxides. That means that if they were to be put into production it might allow the company to consider heap-leaching and solvent extraction-electrowinning (SX/EW) production of cathode copper. “Rather than producing sulphide concentrate, there would be an opportunity to produce copper cathode, which is a finished product for the market, rather than sending the concentrate to a smelter.”
“A sulphide operation typically requires much more capital than oxide, and this area gives us opportunity to evaluate both, once we complete a resource.”
Meagher also points out that so far the average copper grades in the four new areas are higher than the reserve grade at Rosemont of 0.45% copper. In addition, because the drilling indicates the mineralization is close to surface, if any of the areas were to be developed, the strip ratio would likely be much better than Rosemont’s 2:1 ratio. “One of the issues with Rosemont is that it requires that we move 90 million tonnes of waste rock before we actually get to the ore.”
Importantly, Meagher notes that because the historic mines lie wholly within Hudbay’s private land/patented mining claims, they require only state-level permits.
“We’re really happy to find what we consider a high-grade prospect in a known copper belt — it’s a rare thing — and it enhances our opportunity as a company greatly.”