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Constellation Copper plans curtailment, to save on jobs
2007-11-30 17:46 ET - News Release
Mr. Patrick Jame reports
CONSTELLATION COPPER CORPORATION -- LISBON VALLEY OPERATIONS TO BE CURTAILED TO LEACH ONLY
Constellation Copper Corp. has provided an update on the status of its Lisbon Valley mine operations.
Operational update
As previously reported in Stockwatch on Nov. 23, 2007, the Lisbon Valley mine (LVM) continues to produce below-planned capacity. The primary reason for the lower copper production has been the slower-than-planned leach recovery rate experienced since the operation started leaching at the end of 2005. Several significant initiatives to increase production have been undertaken, these include:
* Selective mining of the ore to minimize dilution and the inclusion of acid consuming materials;
* Modification of the ore preparation prior to leaching;
* Increased the mining, crushing and stacking rates;
* Increased the placement of ore by using trucks to deliver primary crushed ore directly to the leach pad;
* Increased solution flows through the plant;
* The most recent initiative, construction and commissioning of an intermediate leach solution (ILS) system.
Although each of these efforts has been, or may become, successful on its own, at this time the leach recovery rate limits copper production at the mine. Implementation of these various initiatives has required significant cash disbursements which have not been offset by higher revenues from increased production. Therefore, the company has determined that the most economic alternative currently available is to convert to a leach-only operation, whereby leaching of the approximately 11 million tons of ore previously placed on the leach pad will continue as long as enough copper is recovered to produce a positive cash flow. There remains about 900,000 tons of ore that is uncovered and will be mined and placed on the heap before the mining operation is curtailed in early 2008. This ore will be primary crushed and placed on the pads with trucks. Including this ore, there will be an inventory of approximately 40 million pounds of contained copper that may be recoverable over the next one to three years, based on the leach recovery rate, copper market prices, and operating costs. The secondary crushing plant, agglomerator and stacking system will be shut down, cleaned out, and partially disassembled for eventual sale.
LVM will reduce its work force from about 159 to about 58 employees required for the continuing leach operation. WARN Act notices will be distributed this afternoon to those employees whose positions will be eliminated, with the layoff date in late January and early February, 2008. The company regrets that this action has become necessary, and will try to minimize the effect upon the affected employees.
The company continues to evaluate financing alternatives. Negotiations with the counterparty on the company's forward sales contracts are progressing positively. In connection with the negotiations, LVM has closed out half of its outstanding copper forward sales contracts, 7,385,000 pounds, at a copper price of $3.08 per pound, resulting in a fixed settlement of approximately $9-million, to be paid over the original maturities. In addition, remaining forward sale contracts, originally placed at an average price of $1.86 per pound, will be settled at average monthly copper prices.
Converting LVM to leach only will assist in minimizing the cash drain on the company, but as stated in the Nov. 23, 2007, release in Stockwatch, the company requires additional cash to continue the reduced operations.
We seek Safe Harbor. |
