Atlas Mining close to sealing off-take deals for copper output

Atlas Consolidated Mining and Development Corp. (ACMDC) is close to hammering out off-take agreements for the expected output of its Toledo/Carmen copper mine in Cebu which will be rehabilitated starting 2006.

"We have shortlisted possible off-takers of our output once the Toledo/Carmen copper mine is operational in two year’s time. These include two Chinese companies, a Japanese, Indian and local smelter plant," said Rodrigo C. Cal, ACMDC assistant vice president and resident manager of the Cebu copper operations.

Cal explained that the off-take agreement is one of the funding schemes to be used by the company to raise the estimated $156 million cost of rehabilitating the mine.

"About 50 percent of our rehabilitation expenses will be raised through an off-take agreement with a copper smelting plant, wherein the latter will advance the money to Atlas and copper extracted from the mines will be transported or delivered to the copper smelting company," said Cal.

The remaining 50 percent will be raised through an initial public offering at the Philippine Stock Exchange (PSE). Earlier this year, ACMDC formed Carmen Copper Corp., a special purpose vehicle that will operate the Toledo/Carmen copper mine complex in Cebu. The mine complex includes several underground mines, open pits and processing facilities to exploit the Carmen, Biga and DAS ore bodies. Carmen will be the first to be mined.

The rehabilitation of the Toledo/Carmen mine complex will involve dewatering the Carmen underground mine, restoring the open pit and replacement of existing surface facilities and modernization of the Carmen concentrator plus the addition of a magnetite recovery station.

Cal noted that the rehabilitation of the mine complex will extend the mine life by another 20 years.

"The DAS underground mine connected to the Carmen mine indicates the viability of developing a new lift that would extend the life of operations by a further 20 years," said Cal.

AMDC used to operate the biggest copper mine in the Asian region before it shut down in 1993 due to flooding and mudslides, with production reaching more than 100,000 metric tons (MT) a day.

"We hope to be able to bring production up to about 42,000 metric tons a day, but we will start with about 10,000 tons and gradually bring this up," said ACMDC president Alfredo C. Ramos in a previous interview.

Ramos said the company is scouting for joint venture partners for its Toledo mining operations.

ACMDC also got clearance from the Department of Environment and Natural Resources (DENR) for its mineral production sharing agreement covering its 234-hectare Carmen ore body. It also got approval for the environmental protection and enhancement for its Toledo copper operations.

Last year, ACMDC started the groundwork for the reopening of the Toledo mines following a cash infusion by its British partner of up to $28 million.

ACMDC completed an agreement with Toledo Copper Corp. Plc (TCC), which is listed on the AIM Board of the London Stock Exchange, that will give TCC access to 40 percent of the Toledo copper-mining assets and operations by making progressive payments and loans of up to $28 million.

The reopening of the mine complex is seen to generate export earnings of up to $2.2 billion at an average of $110 million a year for the duration of the mine’s 20-year lifespan.

A feasibility study on the rehabilitation and reopening of the Toledo mines is being audited by international consultants, Behre Dolbear Australia Ltd.

The study was based on a mine throughput of 42,000 MT of ore a day, which over an 11-year period, is estimated to produce an average 100 million pounds of copper and 45,000 ounces of gold from underground block-caving operations.

Over 39 years, three major open-pit operations have been carried out and two underground block-caving lifts have been mined at Toledo, with ACMDC mining a substantial amount of ore containing copper, gold and silver.