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Company
Copper Mountain Mining Corp.
Suite 550, 800 West Pender
Vancouver, B.C. V6C 2V6
Phone: (604) 682-2992
Fax: (604) 681-5910
www.cumtn.com
Contact
Don Graham, Director of
Investor Relations
Phone: (604) 682-2992
E-mail: don@cumtn.com
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Share Data
Symbol: (TSX.V: CUM)
52-Week Price Range: $1.50 - 2.77
Shares Outstanding: 21.7 million
Market Cap: $43.4 million
Balance Sheet Data
(as of Sept. 30, 2007)
Total Assets: $14 million
Long-Term Debt: $328,0000
Shareholders’ Equity: $11 million
Book Value per Share: $0.51
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We are redeveloping a past producer and bringing it back into production in a more favorable metals market,” says Rod Shier, CFO of Copper Mountain Mining Corp. (TSX.V: CUM). As commodities markets continue to thrive, companies like Copper Mountain are bringing historically productive resource areas back to life. The company holds several licenses and permits for an open-pit copper mine in Canada. With $4 million in working capital, a production decision on its project is expected midway through 2008, and by late 2010, the company expects to produce up to 100 million pounds of copper per year.
The rise in price of copper, silver, and gold are part of an expected bull market that’s positioned to continue for at least the next several years, which may add value to Copper Mountain’s prospect. Its previous owners, including Similco Mines, produced almost 2 billion pounds of copper from the property. In April 2006, the company acquired Similco Mines and 100% of its assets, including the vast 18,000-acre property of copper fields near Vancouver, British Columbia.
The property consists of three developed pits surrounded and divided by an untested saddle zone. An extensive drill exploration program was initiated in January 2007 to update the reported historical resource of the three pits in addition to other targeted areas within and around these pits in an effort to combine the entire zone into one large super pit. The program grew to include 44,000 meters (144,400 feet) of drilling, which made it one of the largest exploration drill programs in British Columbia that year. The goal of the program was to test and possibly expand the reported resources between the three pits to identify a new super pit that would allow for deeper access to additional mineralization.
After drilling, the company identified a potential super pit and announced an existing 2.9 billion pounds of copper resource. The Similco open-pit copper mine, or Copper Mountain Project, stands to produce 100 million pounds per year of copper by late 2010 with gold and silver credits, according to a preliminary assessment by Merritt Consultants International. “We are primarily a copper company with 12% credits for gold and silver,” Shier says. By 2010, the site is expected to produce approximately 40,000 ounces of gold and 900,000 ounces of silver in addition to 100 million pounds of copper. Currently, there are five drills rigs in operation on the property, and the company has no intention of slowing down that rate. The first 10 drill holes intersected multiple zones of mineralization, ranging in thickness from 20 to 311 feet.
Many new mine developments fail to ever see production, even if a high yield is promised, simply because they cannot finance required infrastructure costs or obtain the permits required. “However, you can actually drive your car right to our site via a paved highway,” Shier says. “In addition to an established infrastructure, this past producer is close to the town of Princeton, British Columbia, has power to the site, water licenses, and permits in place that allow the project to take the fast track to production so that we can take advantage of the current robust metal prices.” There are also no known environmental issues or local communities to oppose the rebuilding of this facility. As a former mine site, there is substantial existing infrastructure in place. The existing water license is ample to support a 35,000–tons-per-day operation, and the 138-kilovolt power line is adequate to service the existing facility.
With these developments and a thriving market, the company expects to bring in revenue cheaply and quickly. “One can easily project revenues in the hundreds of millions,” Shier says. “If copper stays around its current price of $3 and our cost to produce is $1, it’s easy to see that we not only will be able to pay back our capital costs but [also] we will turn a large profit.” The company believes that if copper remains above $1.80 per pound, the project makes perfect economical sense based on a preliminary economic assessment study completed in October 2007. Copper Mountain has a number of options available to finance its capital costs, including a combination of debt and equity, and it’s keeping all options open. The company is also negotiating with a select number of banks and brokerage houses in addition to a number of smelter companies that have expressed great interest in the project’s potential.
Copper Mountain is backed by a legendary group of mining and geological experts. CEO Jim O’Rourke has more than 35 years of industry experience and has been involved in bringing six major mines into production, including Endaco, Mar Copper, and more recently the Huckleberry open-pit copper mine. In addition, O’Rourke has excellent knowledge of this former producer because he operated it from 1988 to 1996 while he was president of Princeton Mining Corp.—long before Copper Mountain acquired it. Shier, CFO and director, was formerly with PricewaterhouseCoopers and has more than 15 years of corporate finance experience, including equity and debt financings, merger and acquisition structuring, joint venture negotiations, and hedging.
Most recently, Carl Renzoni joined the board of directors. Renzoni worked as an investment banker with BMO Nesbitt Burns Inc. and more recently as a managing director until his retirement in 2001. He has more than 30 years of experience in securities, specializing in the mining industry. He also has extensive knowledge of all aspects of corporate finance, including mergers and acquisitions. He has worked on the board of several mining companies, including Meridian Gold, Peru Copper, and Yamana Gold.
O’Rourke and his exploration team are have a three-pronged exploration approach. The company first initiated drilling and the development of the three existing pits and the surrounding saddle zone. The company expects to be producing within the next few years, based on the location’s rich copper-producing history and existing infrastructure and permits in place.
The site has a rich history of mining developments dating back to 1884. In 1923, Granby Consolidated Mining, a smelting and power company, acquired the mine and built a milling facility that pulled 31.5 million metric tons of ore (with a grade of 1.08% copper) from underground excavations below two pits, but it closed operations in 1957 because of low market demand and high transportation charges enforced by then owners of the rail line. In 1972, one of the largest mining corporations in the world, Newmont Mining (NYSE: NEM) purchased the site and recommenced production along with the installation of a primary crusher and conveyer system. In 1988, Princeton Mining, led by O’Rourke, purchased the property and continued operations until 1996 when it halted production because of copper prices (70 cents a pound), a lack of low strip ratio reserves, rising production costs, and necessary capital expenditures.
New production will explore for existing mineralization in copper trends, including the Alabama, Mill Zone, Virginia, Voigt Zone, and Oriel deposits. Late in 2007, the company completed a Titan 24 deep-penetration geophysical survey covering an existing area to test for additional mineralization deposits deeper underground. The results were better than expected and showed several areas of high chargeability, indicating the possibility of significantly more mineralization. In 2008, the company continues to drill and is excited and optimistic about drill testing these areas as part of its 2008 drilling exploration program.
At today’s price of $3.90 per pound, Copper Mountain has its hands on a potential 2.9 billion pound resource. “And because this property is over 18,000 acres in size, our aggressive drill program will be ongoing for quite some time,” Shier says. Shier asserts that if the mine produces at a rate of 100 million pounds a year, earnings per share will support a price several times its current trading price of $2 (as of April 10, 2008) based on current copper prices.
RISKS: Based on recent copper prices, the company is relying heavily on the fact that demand will continue to rise for the next few years as it reaches development. If the price per pound drops below $1.80, the company could potentially face financial problems. In addition, while mining infrastructure is in place, a new milling facility will be required if production is to start by late 2010. Because of increased general and administrative expenses over the past year, the company recorded a loss of $837,560 for the period ended Dec. 31, 2007, as compared to a loss of $236,593 for the comparative period in 2006.
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