Coro Completes Due Diligence and Makes Second Option Payment on Cerro Negro Copper Mine in Chile
Coro Mining Corp. (“Coro” or the “Company”) (TSX: COP) is pleased to announce that it is currently in the final stages of evaluating its financing alternatives for the acquisition of Cerro Negro (“CN”), after successfully completing its due diligence on CN and making its second option payment on July 7, 2008.
As announced in its press release NR 02-08, dated February 13, 2008, Coro has agreed to effectively acquire 100% of CN for a total purchase price of US$40,000,000, as follows:
1. On March 24, 2008 Coro elected to enter an initial due diligence period by paying US$1,000,000
2. On July 7, 2008, Coro made it second option payment of US$1,000,000
3. On or before the September 18, 2008, Coro may exercise its option to effectively acquire 100% of CN by paying the balance of US$38,000,000.
4. At the date of exercise of the option, CN has agreed that it will have a minimum of US$10,000,000 of cash and cash equivalents. In the event that CN has less than this, the final payment will be reduced by the corresponding amount.
Completion of the acquisition will be subject to certain conditions, including receipt of all necessary regulatory approvals.
Alan Stephens, President and CEO of Coro, commented, “We are pleased with the results obtained from our due diligence at CN during which we have identified good potential for operating enhancements, cost reductions and production increases at the existing facilities. The Company believes that there is upside potential from additional ore sources not currently being exploited. Finally, we believe that there is good exploration potential on the Cerro Negro property itself and in the surrounding district. Coro is now reviewing its financing alternatives for the purchase of the operation within the remaining option period.”
Due diligence Summary:
Production; An expansion to the SXEW plant expansion to 6,000 tonnes per year cathode capacity was completed in late 2007, and the plant reached its design capacity of 500 tonnes of copper cathode per month in March 2008. The following table, based on information provided by the owners, shows the production of CN in the period 2005-2007.
—————————————————————- Cerro Negro Production 2005-2007 —————————————————————- Sulphide Plant 2005 2006 2007 —————————————————————- tonnes processed 204,363 215,510 194,752 —————————————————————- %CuT 1.22 1.11 1.22 —————————————————————- Cu tonnes 1906 1844 1798 —————————————————————- —————————————————————- Oxide Plant —————————————————————- tonnes processed 222,555 278,254 348,431 —————————————————————- %CuSol 1.73 1.55 1.61 —————————————————————- CN Cu cathode tonnes 1059 1427 1973 —————————————————————- CN Cu in sulphate tonnes 366 294 274 —————————————————————- Total CN Cu tonnes 1425 1721 2247 —————————————————————- Enami Cu cathode tonnes 1271 1691 1437 —————————————————————- —————————————————————- Total Operations —————————————————————- tonnes processed 426,918 493,764 543,183 —————————————————————- CN Cu tonnes 3331 3565 4045 —————————————————————- Enami Cu tonnes 1271 1691 1437 —————————————————————-
According to the owners, in the 5 month period January 1 to May 31, 2008, CN produced a total of 2,371 tonnes of copper, comprised of 1,576 tonnes of cathode copper, 759 tonnes of copper in concentrates, and 36 tonnes of copper in copper sulphate for its own account, and also toll treated 820 tonnes of cathode for Enami.
Geology and Resources; CN is a flat lying manto type deposit hosted by Cretaceous age volcanics and sediments. Mineralization comprises bornite, chalcocite and chalcopyrite and their oxidized equivalents, disseminated within volcaniclastic breccias and carbonaceous shales. Mineralized gravels derived from erosion of the manto are also present. Individual orebodies occur at two, and possibly three, sites within the stratigraphy, and their location is controlled by the intersection of favourable units with sub vertical feeder structures. Orebody thicknesses vary from 3-5m at Portales to in excess of 20m at Chiringo.
Copper production at CN currently takes place from two oxide open pits, Media Luna and Pirquitas; from a small underground room and pillar operation, Portales; from small scale underground mining of sulphide ore remnants and satellite orebodies; and from the re-leaching of spent ore dumps. Additional potentially open pit mineable oxide and sulphide resources are present in the Chiringo deposit, where previous underground room and pillar mining has taken place. Finally, old tailings from the previous sulphide flotation operation contain appreciable soluble copper contents which may be recoverable via reprocessing.
The existing resources at CN have not yet been prepared in compliance with NI 43-101, and the Company is continuing with its evaluation and work programs necessary to define a National Instrument 43-101 compliant resource. Work completed to date by Coro includes initial data validation and compilation of the existing drill hole database; check sampling and re-assaying of 600 old drill core and RC samples; surveying of surface and underground workings; the drilling of 64 Reverse Circulation (RC) drill holes for 3,826m, aimed at providing better definition of the Chiringo, Media Luna, Pirquitas and Portales deposits, and to twin pre-existing drill holes; and channel sampling of the spent ore dumps and old tailings. Results obtained from the re-assaying, twin drilling and channel sampling are in good agreement with the existing information.
Mining/Materials Handling; The Media Luna open pit, which provides most of the oxide production, is contract mined using excavators, front end loaders and trucks, on a two 8 hour shifts/5 days a week basis. The ore is mostly gravel hosted and therefore free digging. The Portales underground mine is also operated on a contract basis, while Pirquitas and the smaller satellite ore bodies are selectively mined by independent contract miners on a price participation basis. Coro has identified operational inefficiencies associated with the existing system of ore handling. Future production from the Chiringo deposit will require pre-stripping of overlying gravels.
Metallurgy/Processing; Coro retained three independent Chile based consultants (SCAF, Idesol and Sandvik) to review the current status of the crushing circuit (which is used to treat all oxide and sulphide ores), and the concentrator, and utilized its own staff and SCAF to review the leach circuit, SXEW plant and copper sulphate plant. Attention was focused on evaluating capacity constraints; estimated capital investments required to optimize the existing facilities; and on identifying operational inefficiencies and potential for improvements in metallurgical performance. Coro is conducting column and flotation testwork at SGS Laboratories, Santiago, Chile, in order to confirm current operating conditions and to assess potential enhancements.
The current leach process comprises 4 stage crushing to 80% -6mm, followed by agglomeration and curing, and stacking onto 2m high heaps with a front end loader. A 50 day leach cycle results in an approximately 70% recovery of copper, and acid consumption of approximately 45-50kg/t. Upon completion of this cycle, the leached material is sent to the spent ore dump for continued leaching and production of either copper sulphate or cathode. The company believes that there may be potential to both increase recoveries and reduce acid consumptions by modifications to existing curing conditions and leach cycle.
The current concentrator process utilizes the same 4 stage crushing circuit, followed by grinding to 180microns in 4 ball mills acting in parallel, and conventional flotation (with a regrind circuit), thickening and filtering. Current recoveries are approximately 70% to a 20-22%Cu concentrate and Coro believes that these recoveries and concentrate grades can be improved on by modifications to grind size and reagent use.
The review of the crushing and grinding circuits has identified potential for these to be optimized and throughputs increased with a modest capital expenditure.
Environmental and Permitting; Coro engaged SRK Consultants, Santiago, Chile to review the current status and assess the future liabilities associated with the Cerro Negro operations.
Permits; The owners have been in the process of regularizing various deficiencies and defects in their operating permits since 2006. Most of these defects have been remedied in the past few months and the owners expect the remainder to be satisfactorily resolved in the next 4 to 6 months, with the submission and approval of an environmental impact declaration by the authorities. Closure plan; CN is required to provide a closure plan to the regulatory authorities by March 2009. This would include a remediation plan for the existing and future tailings and the owners plan to engage an engineering firm to complete this shortly.
The Company believes that the opportunity to re-treat the old oxide bearing tailings could potentially offset the likely ongoing capital and operating costs associated with this closure plan.
Operating Costs; According to information provided by the owners, the current cash costs at CN are in the $1.40 to $1.90/lb range. The cathode copper cash costs are impacted by the current high price for sulphuric acid in Chile, while the copper in concentrate costs are affected by high energy and maintenance costs. Based on its initial due diligence, Coro believes that there is good potential to reduce the internal component of the operating costs through the optimizations and enhancements outlined above.
About Cerro Negro
The Cerro Negro mine is located 37km south east of the town of Cabildo in the Province of Petorca, V Region of Chile, and approximately 210km north of Santiago. All plant and mine sites are easily accessible and are located at elevations of less than 1200m in moderate terrain. Agricultural activity in the immediate area of the property is negligible and confined to rough grazing, apart from company sponsored trial avocado production.
Operations commenced in 1944, and between 1983 and 1996, CN was owned by a predecessor company to Antofagasta Minerals, operating exclusively as a 1,200 tpd concentrator, producing 5,000 tpy copper in concentrates. In 1997, at a time of low copper prices and high costs, CN was sold to its employees, and a small copper precipitate plant subsequently installed. This leaching operation was converted to SX in 1999 to produce copper sulphate and in 2001-02 to a 3,000 tpy SXEW operation; it was further expanded in 2005 to 4,000 tpy capacity and in 2007 to its current 6,000 tpy Cu.
Current copper cathode production capacity, including toll treatment, is approximately 6,000 tonnes per year, concentrator production capacity is approximately 9,600 tonnes of copper-silver concentrates per year, and copper sulphate production capacity is approximately 4,200 tonnes per year.
The toll treatment of oxides is governed by an agreement with Enami which purchases third party ore trucked in from small artisanal mines in the surrounding district. The agreement extends to 2011 and CN’s production plan assumes treatment of 180,000 tonnes per year of this material to recover approximately 2,000 tonnes per year cathode.
Alan Stephens, FIMMM, President and CEO, of Coro Mining Corp., a geologist with more than 32 years of experience is the Qualified Person for the purposes of NI 43-101 and has reviewed the information in this news release.
CORO MINING CORP.
Alan Stephens, President and CEO
About Coro Mining Corp.:
The Company was founded with the goal of building a mining company focused on medium-sized base metals deposits in Latin America. The Company intends to achieve this through the exploration for, and acquisition of, projects that can be developed and placed into production and it has established an experienced development and exploration team to accomplish this. Coro has two main properties; Flores, in Chile and San Jorge, in Argentina, an option to acquire the Cerro Negro copper mine in Chile, as well as other exploration properties located in Chile.
This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Such forward-looking statements or information, including but not limited to those with respect to the prices of copper, estimated future production, estimated costs of future production, permitting time lines, involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such factors include, among others, the actual prices of copper, the factual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company’s documents filed from time to time with the securities regulators in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
Contacts: Coro Mining Corp. Michael Philpot Executive Vice-President (604) 682-5546 Email: email@example.com Website: www.coromining.com
SOURCE: Coro Mining Corp.