‘PRUDENT’ INVESTMENT?

Local resident questions claims by mine owners

Rosemont Mine opponent and Green Valley resident Fred Tahse was a young exploration geologist in the mid-1950s when he discovered outcroppings that became a part of the Asarco Mission Mine complex.

He believes investors, the public and claim-validity examiners should question whether Rosemont is a “prudent” investment economically — water and environmental issues aside.

The term “prudent” is used by the Bureau of Land Management, basing its criteria for determining a “valid” claim on an 1894 court case. It determined a claim was valid if minerals were exposed and a “prudent man” would invest in it.

The Coronado National Forest has begun developing an Environmental Impact Statement on the Rosemont Mine, with public hearings that include one tonight in Green Valley.

Tahse concedes it would require an independent economic mining expert — with no ties to Rosemont or Augusta Resource Corp., the parent company — to evaluate whether his concerns have merit. He said “there simply is not enough data revealed publicly for me to see the evidence that they have enough copper in one area to mine economically.”

Like federal claim examiners, Tahse agrees that deciding whether mining will be profitable is a very subjective decision.

Tahse bases his skepticism on Rosemont’s profitability on Augusta Web site information on how much copper is accessible, the feasibility of processing and overall costs of mining.

These are issues Augusta has been emphatic on promoting as solid.

“I can’t comment on economics due to strict company guidelines that in turn are based on peer review securities documents that are on the Web site,” Augusta Vice President Jaime Sturgess said. “Obviously I feel positive, personally, about the economics of the mine.”

In a January letter to the Green Valley News, Tahse said, “Augusta’s Web site states that they have about 617 million tons of reserves, but only 134 million tons — 22 percent — are proven. The rest — 78 percent — are only estimated.”

The Web site states that 126 million tons of those proven reserves are sulfide reserves and that there are close to 10 million tons of “oxide” copper included in the upper layers that cap the proven sulfide deposit. These areas above these proven sulfide reserves would be mined by an electrolytic leach process called solvent extraction-electrowinnowing (sx-ew).

An additional 466 million tons of sulfide and oxide ore is listed by Augusta as “probable.”

“That 126 million tons of sulfide ore is on average 800 feet down, so you’d have to have rich enough oxide copper — possibly mixed with sulfide copper — to pay for that huge investment of reaching it,” Tahse said. “I just don’t see how a bank would invest in 78 percent probable reserves when we don’t know much about the significance of other Augusta and past owner’s drilling data.

“Can Augusta profitably mine ‘probable’ copper before they hit their proven copper in the middle of the pit?”

BLM claim examiner Ralph Costa said, generically speaking, the interpretation of drilling data and the spacing is critical to interpreting validity of claims.

“Let’s say that I have four drill holes on a mining claim, and you have four on a group of mining claims,” Costa said. “If my drill holes are 100 feet apart and show something similar in each hole, and yours are 800 feet apart — well there’s a lot of different mineralization that can happen in 800 feet.”

Tahse said: “I’m also skeptical that Augusta can economically use sx-ew to process levels of copper listed in their public studies only as ‘indicated reserves’ with 10 percent oxide and 20 percent sulfide in order to pay to reach the main sulfide orebody.”

Sturgess said feasibility and resource reports on the Web site explain the justification for these cutoffs — one economic and one geologic report.

“The 10 percent oxide represents a point where copper is commercial and not barren,” he said. “You have two commercial pounds of copper per ton of rock — randomly but normally distributed — in any given block of rock at that point. When the price is higher, the cutoff point is lower and the reverse is true.”

Whatever the theoretical point of profitability for Rosemont, Freeport McMoRan has more total sx-ew copper facilities than any other mining company. According to Freeport’s Web site, in 2007, most mines with similar processes to the one proposed for Rosemont to leach crushed copper processed ore with much higher concentrations of copper.

Safford and Morenci were in the 40 percent - 56 percent range for sulfide copper processed by sx-ew.

According to Pay Dirt magazine Editor Gary Dillard, in South America, the FMI El Abra mine, leaches oxide copper ore by sx-ew that is capping a deeper sulfide ore body, much like Rosemont.

Freeport reports it is processing 53 percent copper at El Abra, and the South American Cerro Verde mine did the same in the past, again with richer copper deposits (currently 46 percent).

Tahse said the company may be underestimating overall costs of mining on its Web site and suggested that those who want to research comparative mining costs look at an industry site called the “World Mine Cost Data Exchange.”

However, he added: “I do not want to get into some kind of contest over costs, I just believe that those who think this is a good and prudent investment should closely compare their economic data on Rosemont with similar mines.”

Dick Kamp is Wick Communications Environmental liaison.

If you go

Meetings on the Rosemont Mine:

Tonight: Canoa Hills Center, 3660 S. Camino del Sol, Green Valley, 6:30 p.m.-8:30 p.m.

Thursday: Patagonia Union High School, Highway 82, Patagonia, 6 p.m.- 8 p.m.