Curis’ permitting challenges continue

POSTED ON October 01, 2014 BY Travis McPherson
CATEGORY Curis Resources, Stories,

Many people I know, myself included, felt that the Taseko Mines' friendly bid for fellow Hunter Dickinson group company Curis Resources (CUV:TSX) was lowball. This morning, we were reminded why a large takeover premium might not have been warranted.

Judge Milhasky, the administrative law judge assigned to case No. 12-005-WQAB in the Arizona Office of Administrative Hearings, made a recommendation in the appeal of the Arizona Department of Water Quality decision to issue a temporary individual aquifer protection permit to Curis' Florence Copper project. Judge Milhasky's order is a non-binding recommendation to the Water Quality Appeals Board, which will make the final determination on the permit.

I would not expect this to have any effect on the takeover by Taseko.

"Although we are disappointed that the judge chose to take the unwarranted step of recommending rescission of the permit even when the appellants' sole expert witness did not make such a recommendation, we are pleased she agreed Florence Copper's PTF will not have an impact on local sources of drinking water," said Rita Maguire, Florence Copper's executive vice president and general counsel. "The APP issued by the ADEQ contains requirements that go well beyond current environmental regulations, ensuring that public health and safety are protected."

"Most of these remaining issues involve additional monitoring requirements and geochemical analysis which have already been addressed in our pending Underground Injection Control ("UIC") permit application before the EPA, and we believe that the Water Quality Appeals Board ("WQAB") will take this into consideration when it makes the final determination on the permit," said Dan Johnson, vice president and general manager of Florence Copper Inc.

We visited the Florence Copper project earlier this year. It was the first ISR facility we had visited and coming from the Globe-Miami copper district only a few hours away where massive open pits, leach pads, tailings and the rest of it have a large visual impact, I was confused by the vocal minority's claim against ISR at Florence. I suspect the documentary "Gasland" had some impact.

Injection wells at Florence. This is what mining there looks like (Photo: Curis Resources)

There is an existing test facility at Florence from when BHP held the project and so we saw what an ISR operation would look like. Although I am understanding of the need to determine ground water safety when injecting anything into the Earth, the impact of an ISR operation looks much less than that of the Globe-Miami style.

Regardless, the permitting challenges faced by Curis with regards to the proposed ISR facility are real and, assuming the deal closes with Taseko, are now being absorbed by their shareholders. Curis might look cheap by most acquisition metrics, but it is still far from in the clear of permitting hurdles and, ultimately, generating meaningful cash flow.

Augusta Resources' Rosemont project faces an uphill permitting battle but was acquired by Hudbay for a nice premium earlier this year.

Excelsior Mining (MIN:TSXV) is another company trying to develop an ISR copper project in Arizona. That group, led by Chairman Mark Morabito (CEO of Alderon Iron Ore), is bringing the Gunnison project into Feasibility and hopes permitting won't be an issue for them as it has been for the Florence project. Excelsior trades at a $25 million market cap versus Curis currently at $62 million.

The company now intends to move forward in the near future with the production test facility, which will be a test program demonstrating to local residents and regulators that ISR is a safe and technically-advanced method of copper recovery.

Read: Administrative Appeal Findings and Recommendation Submitted to Water Quality Appeals Board

Read our site visit piece: Cheap Copper

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

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