U.S. REPORT “In situ” leaching key to Arimetco’s aggressive plans

By adding the Van Dyke project in Arizona to its list of U.S. properties, Arimetco International (TSE) has increased its copper reserves to six billion from 600 million lb., says Chairman Roy Shipes.

During an informal breakfast meeting with Toronto analysts, Shipes said he plans to build the newly hatched Arizona company into a major copper producer with annual output of 100 million lb., compared to 4.1 million lb. in 1990.

But at least one analyst, who attended the meeting, has doubts about Arimetco’s ability to achieve an aggressive growth plan that has piqued investor interest and driven the shares to around $4.

The analyst, who asked not to be identified, is skeptical about the in situ leach mining technology which Arimetco is planning to use on a deposit hosting 100 million tons of grade 0.53% copper at Van Dyke. He also points out that half a billion tons of reserves in a deposit three miles from Arimetco’s Yerington mine in Nevada are listed as preliminary.

Having signed a 5-year marketing deal with Billiton Minerals of New York, Arimetco is successfully processing stockpiled copper oxides at the Johnson mine in Arizona and at Yerington as well.

A 25,000-lb.-per-day solvent extraction electrowinning (SX-EW) plant has been installed at Yerington while identical equipment is being used to produce 35,000 lb. per day of cathode copper at the Johnson operation.

Under stage two of Arimetco’s growth plan, work crews are doubling the SX-EW capacity at Yerington where recoverable copper oxide reserves are divided into 132 million lb. of tailings and 152 million lb. of stockpiled ore.

Future plans call for the development of 50 million tons grading 0.49% of sulphide ore in the Yerington and nearby Ann Mason deposit which hosts almost half a billion tons of 0.4% copper (including a high-grade core of 110 million tons of 0.51%).

After completing stage two at Yerington, work crews will move to develop an additional 110 million tons of 0.53% copper at Van Dyke by constructing a 20,000-lb.-per-day SX-EW plant before expanding the daily capacity to 60,000 lb.

Shipes, who cut his teeth in the copper mining business during spells with Phelps Dodge (NYSE) and Papua New Guinea-based Ok Tedi Mining, has borrowed from a popular sportswear company’s advertising manual by stating that the task remaining is to “just do it!”

But skeptics say that what looks good on paper may be difficult to achieve in reality. “As much of the Ann Mason deposit is located 500 ft. from surface, the stripping ratio could be immense,” the analyst said. He also has doubts about Arimetco’s ability to recover Van Dyke copper by in situ leaching, a process that involves injecting acid into the ground through existing wells and bore holes.

As the leach solution moves through the ore, metals are selectively dissolved and the solution is then recovered through a recovery well for processing in a surface plant.

“While in situ leaching has been used to recover uranium from deposits in Texas, Wyoming and Ontario and at old copper mines in Arizona, it has yet to prove itself on such a large scale operation as the one Shipes is planning,” the analyst says.

However, Alan Matthews, Arimetco’s manager of corporate development, says the strip ratio at Ann Mason is estimated to be between 2.2:1 and 3.5:1, depending on the reserve cutoff. He says the company is confident that more near-surface ore will be proven up near the deposit.

With permits to build the SX-EW plant at Van Dyke, Arimetco is expected to spend US$6 million this year on its expansion while increasing production to 45 million lb. “We hope to bring the Ann Mason reserves into the proven category,” added Shipes.

As it takes roughly 10 lb. of sulphuric acid to produce a pound of copper, sulphuric acid is the most costly component of the electrowinning process. But Shipes says Arimetco may be able to reduce expenditures by producing its own sulphuric acid. It is costing Arimetco about 80 US cents to produce a pound of copper at Yerington and 60 US cents at Johnson, compared with the metal’s recent trading price of US$1 a lb.

Arimetco’s 17.8 million issued shares (8.9 million of which are held by Shipes and his family) were trading recently at $3.70, in a 52-week range of $4.50 and $1.06.