Lundin Mining (LUN-T) wants to give an old copper mine in Spain its identity back.
The company has reached an agreement with the two owners of the Touro copper project, in La Coruña province of northwest Spain’s Galicia region, that will allow it to build a mine at the site, which had been switched from a copper to an aggregate mine for the construction industry in the 1980s.
Lundin has the option to buy an 80% stake in Touro for €60 million ($79 million), and it has until Oct. 1 to exercise the option. Until then it will continue due diligence, which includes drilling and other technical work.
The payments break down to around $13.2 million if Lundin exercises the option, $39.4 million when it makes a construction decision and $26.3 million upon commercial production.
Lundin would have to pay all construction costs if it makes a positive construction decision. At that point the firms would form a joint venture with Lundin as the operator, and capital expenditure costs would be repaid through a preferential interest in surplus operating cash flows.
The company says it has mobilized several drill rigs, and that it is deciding whether or not to exercise the option.
Lundin says part of the project’s appeal is its easy access to known mineral resources. The property hosts three pre-existing open pits, and copper mineralization is flat-lying at or near surface.
The project’s copper-gold mineralization is characterized by disseminated to semi-massive and rarely massive sulphides comprised of coarse-grained pyrrhotite iron sulphide and chalcopyrite copper-iron sulphide, locally associated with gold.
Mineralization is hosted within a generally shallow-dipping, layered succession of metamorphic rocks, with the mineralized layers commonly ranging between 10 metres and 60 metres thick.
While the property hosted a copper mine in the 1970s and early 1980s, it was turned into an aggregate mine after open-pit copper mining stopped in 1986 because of low prices. It hasn’t been explored since that time.
The project has a historical non-compliant resource of 196 million tonnes grading 0.39% copper, and is made up of 205 mining claims that cover 57.4 sq. km of ground.