Question: Is Rosemont a 'prudent' investment?

(The Coronado National Forest has begun developing an Environmental Impact Statement on the Rosemont Mine with public hearings that began in March. Meanwhile, a bill is moving through Congress to withdraw mineral entry from Coronado land. If approved, that legislation could call into question the economic viability of Rosemont and other Augusta Resource Corp. mine holdings in the Santa Rita Mountains. Similar technical questions could be asked by U.S. government claim examiners, should that legislation pass, that are asked here by Fred Tahse, who is a Green Valley retired mineral exploration geologist and Rosemont critic.)

Rosemont Mine opponent and Green Valley resident Fred Tahse was a young exploration geologist in the mid-'50s when he discovered outcroppings that became a part of the Asarco Mission mine complex. He believes that investors, the public, and any claim validity examiners should question whether Rosemont is a "prudent" investment economically - water and environmental issues aside.

The term is used by the Bureau of Land Management (BLM) that bases its criteria for determining that a mining claim is 'valid' is based on an 1894 court case that said that a mine claim was valid if minerals were exposed and a "prudent man" would invest in it.

Tahse concedes that it would require an independent economic mining expert with no ties to Rosemont to evaluate whether his concerns have merit and that "there simply is not enough data revealed publicly for me to see the evidence that they have enough copper in one area to mine economically."

Tahse also acknowledges that deciding whether mining will be profitable is a subjective exercise.

Tahse bases his skepticism on Rosemont's profitability on Augusta Web site claims about how much copper is accessible, feasibility of processing and overall costs of mining.

In a January letter to the Green Valley News, Tahse said, "Augusta's Web site states that they have about 617 million tons of reserves, but only 134 million tons - 22 percent - are proven. The rest - 78 percent - are only estimated."

The Web site states that 126 million tons of those proven reserves are sulfide reserves and that there are close to 10 million tons of "oxide" copper included in the upper layers that cap the proven sulfide deposit. These areas above these proven sulfide reserves would be mined by an electrolytic leach process called solvent extraction - electrowinnowing (sx-ew).

An additional 466 million tons of sulfide and oxide ore is listed by Augusta as "probable."

From Tahse's perspective, "That 126 million tons of sulfide ore is on average 800 feet down, so you'd have to have rich enough oxide copper ... to pay for that huge investment of reaching it. I just don't see how a bank would invest in 78 percent probable reserves when we don't know much about the significance of other Augusta and past owner's drilling data. Can Augusta profitably mine 'probable' copper before they hit their proven copper in the middle of the pit?"

BLM claim examiner Ralph Costa said that, generically speaking, the interpretation of drilling data and the spacing is critical to interpreting validity of claims.

"Let's say that I have four drill holes on a mining claim and you have four on a group of mining claims," Cost said. "If my drill holes are 100 feet apart and show something similar in each hole, and yours are 800 feet apart - well there's a lot of different mineralization that can happen in 800 feet."

Tahse said he's "skeptical that Augusta can economically use sx-ew to process levels of copper listed in their public studies only as 'indicated reserves' with .10 percent oxide and .20 percent sulfide in order to pay to reach the main sulfide ore body."

In an interview, Jamie Sturgess, of Augusta ,said "There are feasibility and resource reports on the Web site explaining the justification for these cutoffs; one economic and one geologic report. The .10 percent oxide represents a point where copper is commercial and not 'barren.. You have two commercial pounds of copper per ton of rock - randomly but normally distributed - in any given block of rock at that point. When the price is higher, the cutoff point is lower and the reverse is true."

FREEPORT McMoRan Copper and Gold Inc. (FMI) has more total sx-ew copper facilities than any other mining company. According to the FMI Web site, in 2007 most mines with similar operations proposed for Rosemont to leach crushed copper processed ore with much higher concentrations of copper.

The Safford and Morenci mines, fore example, were in the .40 percent to .56 percent range for sulfide copper processed by sx-ew.

According to Pay Dirt Magazine Editor Gary Dillard, in South America, the FMI El Abra mine, leaches oxide copper ore by sx-ew that is capping a deeper sulfide ore body, much like Rosemont. FMI reports that they are processing .53 percent copper at El Abra, and the South American Cerro Verde Mine did the same in the past, again with richer copper deposits (currently .46 percent).

Tahse said he believes that the company may be underestimating overall costs of mining on their Web site and suggested that those who want to research comparative mining costs look at an industry site called the "World Mine Cost Data Exchange."

However, he adds, "I do not want to get into some kind of contest over costs, I just believe that those who think this is a good and prudent investment should closely compare their economic data on Rosemont with similar mines."

(Editor's Note: Kamp is an environmental liaison for Wick Communications.)