Copper Mountain poised for growth at flagship mine in BC

Copper Mountain Mining (TSX: CMMC; US-OTC: CPPMF) is wrapping up the second phase of a three-part exploration program at its New Ingerbelle copper property, 1 km west of its Copper Mountain mine near Princeton, British Columbia.

The second phase encompasses 10,000 metres in 30 holes. Results so far have come from the first seven holes and include 0.63% copper equivalent over 165 metres from 147 metres downhole and 1.03% copper equivalent over 105 metres from 132 metres downhole.

The company says it will design the third phase on the results from phase two. It will primarily perform infill drilling in its third phase, but also step out in certain areas it believes have high potential. However, the company has not yet announced timing for when it will progress into phase three.

"We're quite pleased with the results that we're getting to date and we see unbelievable potential at New Ingerbelle," Copper Mountain president and CEO Gil Clausen says in an interview with The Northern Miner. "So we will likely be approaching the board of directors to determine their appetite for moving up the drilling program."

Phase one, which consisted of 22 holes, confirmed historical data and allowed to progress to phase two. The company believes phase two will both expand the resource area at New Ingerbelle and help upgrade inferred resources to the measured and indicated categories.

Based on historical data, New Ingerbelle contains 104 million inferred tonnes grading 0.42% copper equivalent.

The company hopes the three-phase program will provide the basis for a feasibility study at New Ingerbelle. In order to initiate the feasibility study, the company would like at least 150 million measured and indicated tonnes at New Ingerbelle. It says that could add 10 years to Copper Mountain's mine life.

"I think we're getting to the point where we have a sizable resource so that we can then move into a study phase," Clausen says.

The secondary crusher at Copper Mountain Mining's namesake copper mine in British Columbia. Credit: Copper Mountain Mining.

Copper Mountain produced 23.1 million lb. copper equivalent in 2018's second quarter, 13% more than the second quarter of the previous year. For the first six months of the year, the company produced 46 million lb. copper equivalent, or 39.9 million lb. copper, 12,600 oz. gold and 146,300 oz. silver.

The company says it remains on track to meet its 2018 production guidance of 80 million lb. copper. It mined 214,500 tonnes per day in the second quarter, 13% above guidance, and milled 37,000 tonnes per day at 0.34% copper.

However, the company expects stronger production in the second half of 2018. It says production was impacted in the second quarter because it had to repair two mill transformers and perform a routine change on a SAG mill liner. In total, maintenance shut the mill down for about five days. The company says it largely offset the impact by processing higher grade ore.

The company will also look to replace its dry transformers at the Copper Mountain mill over the next year with oil-filled transformers. Clausen says the oil transformers are built for a harsher environment and better suited to the type of work.

The company plans to release its 2018 second quarter financials August 7, 2018.

It also plans to spend $5 million exploring its copper-gold landholdings in Queensland, Australia. Copper Mountain acquired the land when it bought out Altona Mining in mid-April 2018, for $72 million. The deal included the fully-permitted Eva copper project, several regional assets and $30 million in cash.

The company is currently progressing Eva to a feasibility study it aims to complete in 2018's third quarter. It would like to begin construction at Eva early next year. Based on a prior study, the company estimates the open pit project could produce 85 million lb. copper per year over 14 years. It remains open to depth.

Drillers on the Eva copper-gold deposit at Cloncurry. Credit: Altona Mining.

In a 2017 drill program, Altona tested the Companion, Veiled and Quamby prospects in Queensland. Highlights include: 1.48% copper and 0.98 gram gold over 32 metres from surface at Companion; 0.53% copper and 0.23 gram gold over 74 metres from surface at Veiled; and 0.61% copper and 4.23 grams gold over 13 metres from 29 metres downhole at Quamby.

Clausen says Copper Mountain started its Australian exploration program a few months back.

"We're systematically doing soil sampling and geochemical analysis over a large area that includes extensions on our existing deposits at the Eva copper project," Clausen says. "But we're also looking at the land package all the way down to Cloncurry, where we have about a 100 km continuous band of landholdings that have highly prospective targets."

The drilling includes water testing at Eva that Clausen says has so far been successful.

He adds that in the next few weeks the company will start drilling in another area it's calling the Cameron copper project, located 60 km south of Eva in an area called Cameron Crossing.

The project is a combination of two prospects located next to one another: the Reaper prospect and the Companion prospect.

Altona had previously drilled both targets. Copper Mountain has done soil analysis on the project and will supplement its drilling with geophysical work.

"I would term that the next big copper target in Australia that we have after our Eva project," Clausen says. "It has the potential to be a new mine."

While the company hasn't disclosed the scope of the program at Cameron, it says it will monitor the drilling on a hole-by-hole basis.

"If you look at our project pipeline, it looks like if we're successful we'll be able to move an asset into cash flowing position when the next asset is ready for the development/construction cycle," Clausen says.

"In two or three years, with hopefully a strong copper price, the company will have two cash flowing assets with additional growth on the table."

Clausen officially took over as Copper Mountain's CEO on June 1, 2018. Prior, he served as CEO of Brio Gold, which Leagold Mining (TSX: LMC; US-OTC: LMCNF) acquired in early 2018 for roughly US$279 million.

"I followed Copper Mountain for years," Clausen says. "Growth at Copper Mountain is timed perfectly in our view with a developing bull market for copper over the next 6-8 years.

"There's nobody out there in the copper sector, companies our size especially, that have this type of manageable growth that's going to create so much value to the shareholders and can be done in a non-dilutive way."

Shares of Copper Mountain are currently valued at $1.17 with a 52-week range of 95 ? to $1.85. The company has a $225 market capitalization.