A difference of opinion between Azco Mining (TSE) and Magma Copper (NYSE) over capital and operating costs at the proposed Sanchez project in southeast Arizona has prompted the latter to drop plans to buy a 15% interest.
Magma signed a letter of intent in July to buy the interest for US$10 million and paid Azco US$450,000 in advance.
In addition to being at odds over costs, the companies are in disagreement over the advance. Magma has requested the money be returned, but Azco claims it is non-refundable under the terms of the letter of intent. Azco says its plans to bring the project into production are not affected by Magma’s decision to back out.
It says a recent due diligence study, done in connection with an underwriting agreement with Barclays Bank (announced prior to the Magma agreement), re-confirmed all capital and operating costs.
The capital cost of the heap-leach project is estimated at US$75 million and, based on an operating rate of 12 million tons per year, would produce about 56 million lb. copper per year. Projected cost: about US49 cents per lb.
Be the first to comment on "Magma cancels Azco investment"