By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
Copper Mountain Mining (TSX: CUM), Successfully Increases Efficiency and Lowers Operating Costs at Copper Mountain in Canada
Copper Mountain Mining (TSX: CUM), located in Canada, is doing an excellent job increasing their efficiency and decreasing their costs. With the addition of the world’s largest cone crusher (housed in the 12 story building on the left), they are well positioned to be very profitable as copper prices recover.
PDAC 2017: Rod Shier CFO Copper Mountain Mining
Mr. Rod Mr. Shier, the CFO of Copper Mountain Mining (TSX: CUM), and his company have faced a lot of challenges in the last two years with tumbling prices in copper. Even with these challenges, the company has increased efficiency to ensure that shareholders get the best level of return possible.
Said Mr. Shier, “Last year was a really transformational year for us. It was the second full year with the secondary crusher. In 2015 we achieved our design capacity and in 2016 the team continued to optimize the whole system with great results. Our capacity was 35,000 tons per day and by the fourth quarter of 2016 we were running at about 41,200 tons per day through the mill, a significant milestone. We produced a total of about 83 million pounds of copper or about 103 million pounds of copper equivalent for the 2016 year. We have a gold and silver credit which really helps us to keep our costs down. Last year our grade was about 0.33% copper. We are right on track with our mine plan, and I would expect a little lower grade this year, but still producing 75 to 85 million pounds of copper. We continue to mine in the pit two area, and will be starting to bring in the higher grade Oriole deposit a little later in the year. We have some planned maintenance in the first half of the year, so production will be higher in the second half of 2017.”
In addition to increasing their processing tonnage per day, they were able to start work on a new area of their deposit. Said Mr. Shier, “Another thing that has changed for this year is that we have a permit amendment where we can now go in and mine a satellite deposit called Oriole, which is a small higher grade deposit that has some significance because it will deliver two and a half or three million tons of higher grade. In addition, Mr. Shier said the valley to the east, where they finished mining the Virginia Pit last year, is now available for expanding their waste rock storage area into and provides a shorter haul for the waste rock. As a result we can move a lot more material in 2017 than earlier years.”
To manage all of the traffic that moves the ore to the processor, the company installed a system to regulate the movement of the personnel and equipment at the site. Mr. Shier said, “That is very advantageous. One of the big things we saw improve for the company is that the system we put in recently has really improved the efficiencies of the operation. It is almost like a mining taxi dispatch system or air traffic control. You know where all of your fleet is, you know what they are moving and you avoid line ups at the crusher or at the fuel station and so forth. It has really improved our average payload, which has gone from say 200 tons average load to 215 to 220 tons. It has really been the equivalent of adding a truck and a half to the mine fleet without having to buy more trucks so that has gone very, very well.”
Mr. Shier believes that 2017 will be a better year for the company. He said, “2017 is going to be a better year than 2016 as copper prices have started to recover and we are operating well above our design capacity. We are continually working on maximizing our profits”.
One of the reasons the company has been successful is due to their agreement with their partner. Mr. Shier said, “Mitsubishi is an excellent partner. They own 25% of the project and assisted with arranging our low cost strategic friendly debt. We have already paid back over US $100 million in principal and interest. One hundred percent of our product goes to Mitsubishi. We never have to look for where to sell our concentrate. It goes to Japan and we get paid at LME pricing as soon as it is loaded on the ship.”
The success of the company is, in large part, due to the experience of the team running it. Said Mr. Shier, “We have a very experienced management team led by Jim O’Rourke. You need a few gray hairs so problems that arise can be dealt with. We brought this mine into production in four and a half years, which is a testament to the experience of the team. We have a very experienced team. We are looking for other opportunities that are out there as well as starting to look in our own backyard. Post 2012, we had not done a lot of exploration drilling on the property. Now, with the recovery in copper prices, that’s starting to change. We have a number of significant drill targets at depth that need to be followed up on with additional drilling”.
Asked about exploration plans in 2017, Mr. Shier said, “We are going to be drilling about 10,000 meters this year. The plan is still being finalized, but some of the earlier drill intercepts from our preproduction time such as 128 email@example.com% copper and 0.25g/t gold underneath Pit 2 and 102 firstname.lastname@example.org% copper and 0.2 g/t gold underneath Pit 3 need to be further explored”. Mr. Shier continued, “As we get more confidence in the recovery of copper, which is looking very good, we will loosen the purse strings on exploration on the property a little more. We have historically been very successful with exploration at the Copper Mountain mine site, and we see no reason for that to change now.”
The experienced team has drawn serious shareholders. Mr. Shier said, “We’ve have 133 million shares outstanding and have a very significant 20% shareholder out of Chicago. We also have a few 5% shareholders as well. The stock was hit just like everyone else in the industry, falling from a high of $8 dollars in 2011 era to a low of $0.35 last year. With the recovery of the copper price, attention is starting to come back to the small cap producers, so now is a great time to get in. In these markets, you want a stock that is leveraged to the copper price, and that’s our stock.”
Mr. Shier believes the copper price will continue to increase during the year. He said, “The International Copper Study Group just put out a release that there was a slight shortage in world copper markets in 2016. With no major new copper mines coming on stream in the next few years, it looks like the copper markets will continue to experience slight shortages. That will help the copper price recover. We will continue to produce at the lowest cost possible to make the most money for our shareholders.”
Copper Mountain Mining Corp
1700 – 700 W Pender Street
Vancouver, BC V6C 1G8
Tel: (604) 682 2992
Fax: (604) 682 2993
Jim O'Rourke, P.Eng.
President & CEO