Excelsior Mining Corp. [MIN-TSXV, EXMGF-OTCQX] on Thursday said mining operations have commenced at its 100%-owned Gunnison copper project in southeastern Arizona.
Excelsior shares advanced on the news, rising 3% or $0.03 to $1.03. The shares are currently trading in a 52-week range of 78 cents and $1.14.
Excelsior has previously said the Gunnison project has the potential to be one of North America’s lowest-cost copper producers. The project is designed as a copper in-situ recovery project using solvent extraction-electrowinning to produce up to 125 million pounds of copper cathode annually.
A feasibility study released in December, 2016, envisages a mine life of 24 years and an operating cost of US$0.65 per pound. The initial capital cost was expected to be US$46.9 million.
Copper was trading at US$2.82 per pound on January 2, 2019.
The company says the fractured nature of the ore-bearing rock means it is amenable to in-situ recovery methods, which involves the use of boreholes and acid to dissolve the copper and transfer it to nearby recovery wells for processing.
The processing is usually achieved via chemical precipitation or solvent extraction electrowinning (SX-EW).
Following a comprehensive commissioning program that has been continuing for several weeks, regulatory approval to commence mining operations through the injection of acid was recently received from the U.S. Environmental Protection Agency, the company said in a news release on Thursday.
Delivery of mining fluids to the copper orebody has commenced; fluids will now circulate through the closed-loop system until the concentration of copper held in solution meets sufficient grade to be treated through the Johnson Camp processing facilities to then extract copper and produce copper cathode sheets.
The first copper cathode sales are expected in the first quarter of 2020, the company said.
“Following on the heels of the successful completion of the construction phase, mining operations at the Gunnison copper project are now under way,” said Excelsior President and CEO Stephen Twyerould. “We remain absolutely confident in our capacity to deliver a low-cost copper production while maintaining our commitment to safety and the environment,” he said.
Excelsior Chairman Mark Morabito said the company looks forward to the ramp-up of existing operations in 2020 and laying the groundwork for future expansion to Gunnison’s full production capacity of 125 million pounds of production per annum.
According to the feasibility study, Excelsior expects to achieve an initial production rate of 25 million pounds of copper cathode annually using the existing Johnson Camp Mine facilities. That would be followed by an intermediate expansion stage to 75 pounds annually and the final expansion to full production of 125 million pounds annually in the seventh year of operations.
The staged production profile makes possible the funding of future expansions out of cash flow.
The feasibility study is based on mineral reserves of 782 million short tons of 0.29% copper or 4.5 billion pounds.
News that production has commenced is a boost for Altius Minerals Corp. [ALS-TSX, ATUSF-OTCQX], which holds a 1.62% gross revenue royalty on the Gunnison Project while the plant capacity is less than 75 million pounds of copper annually.
The royalty drops to 1.5% while the plant capacity is greater than or equal to 75 million pounds. Altius also holds a small equity interest in Excelsior of 1.5%.