Jim O'Rourke - CEO of Copper Mountain

Jim O'Rourke - CEO of Copper Mountain

Copper Mountain (CUM:TSX) announced it has entered into an option agreement with Westar Resources and Bearclaw Capital to earn up to 75% interest in the Axe property in British Columbia.  The Axe property is an advanced stage project with the potential to host a large copper porphyry.  Currently Westar and Bearclaw hold the property in 70/30 JV, respectively.  Copper Mountain earns 51% interest in the project by spending $3 million exploring the property by the end of year four and by making certain annual cash payments.  If Copper Mountain exercises the option, then they will hold 51%, Westar Resources will hold 34.3% and Bearclaw will hold 14.7%.  At that point, Copper Mountain can earn up to an addition 24% (total of 75% interest) by either completing a feasibility study or spending more than $12 million on the project.  At that point, Westar will hold 17.5% interest and Bearclaw will hold 7.5% interest.

Copper Mountain is Canada’s newest large-scale copper producer.  The company is targeting production of 60-75 million pounds of copper annually.  Copper Mountain experienced some technical issues in 2012, missing guidance on milling rates and production volumes, but those issues are being resolved with a pre-SAG crusher expected to be purchased later this year for $34-$40 million (according to Scotiabank) and will likely have to be financed, potentially by Mitsubishi who owns 25% of the Copper Mountain mine.  With strong copper prices, Copper Mountain will perform well once these technical issues are resolved.

News Release here: Copper Mountain Signs Letter of Intent to Option Westar's Axe Property