THEMAC Resources

And the Copper Flat Mine

Risk and Reward in the Mines of New Mexico

By Anna Candido

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New Mexico has a long history of mining. The first mining claim in this southwestern mountain state was established by Pedro de Abalos in Sierra County in March of 1685, and since then, thousands of mines and prospects have popped up across New Mexico resulting in the extraction of $30 billion worth of minerals since the early 1800s. There are presently 269 mining districts spread across 27 counties, including in Sierra County, a district that has produced more than $20 million worth of base- and precious-metals and iron. THEMAC Resources Group Ltd., a Canadian-based resource company, is one of the more recent players in this lineage.

The primary asset for THEMAC Resources is a subsidiary called New Mexico Copper, which owns the Copper Flat Mine in the Hillsboro Mining District in Sierra County, New Mexico. Jeffrey Smith, a mining engineer and former consultant in the minerals industry, is the Chief Operating Officer for THEMAC. Smith explains that the Copper Flat Mine was originally opened for mine development in 1982 by Quintana Minerals, for whom he worked as a mine engineer. The Quintana site closed after only three months of operation when the price of copper dropped from $1.70/pound to $.70/pound. Because this drop meant that the project was no longer economically sustainable, Quintana’s financial partner, the Canadian Imperial Bank, was forced to seize the mine, and eventually sold off much of the project’s structures, equipment, and buildings (including an administration building that was sold to a nearby town and converted into a church.)

The foundations of the mine, however, were buried and left in place with the idea that at some point, somebody would reinvest in the mine and rebuild the project. Over the years, as desert vegetation grew over the site, companies like Alta Gold, Hydro Resources, Rio Gold, and Gold Express took steps to reopen the mine, but none were able to follow through on development. Around four years ago, New Mexico Copper was formed with the specific intention of developing and restarting the mine.

A family investment company based in Australia called Tulla Resources became the major shareholder of THEMAC Resources, and Tulla’s Director Andrew Maloney was appointed CEO of THEMAC Resources in February of 2013.

Maloney explains, “THEMAC likes copper in general. Three or four years ago, we’d been following the market and we liked the idea of having exposure to copper. We think it’s got a bright future… Exposure to copper is of particular interest to Tulla due to the depletion of resources in existing mines in combination with declining ore grades. The combination of these two factors, plus increasing costs to develop major projects and growth in global demand, should result in a rise in the long term copper price.”

Smith echoes this point, noting that “the copper prices have cycled and are at very good levels now. Mineral economists are projecting copper prices to remain strong for the foreseeable future.” Maloney further accounts for the increase in copper’s value, explaining, “There’s been a huge growth in demand in some of the developing world. Obviously China has been a big user of copper over the last ten years or so, so they’ve come into the market in a big way. In more recent times, what has been positive has been the pickup in the US housing market and in the manufacturing of cars, so that’s actually surprised everyone a bit.”

Another important consideration for the Copper Flat investment was where the site is located. Maloney adds, “We also really like the fact that Copper Flat is a US project, we think that has a lot of benefit. We tended to steer away from projects that were in risky regions, we like the idea of stable environments, and the US provides that… There’s been examples of people who’ve invested in Africa or South America where they’ve had major problems politically with their assets, so we made sure to stay away from those areas when investing.”

Finally, there are huge economic benefits to restarting a pre-existing project. “There’s a significant amount of money in existing infrastructure in the site. Water pipelines, major electrical infrastructure, a lot of the original concrete foundations, drainage works, roads and a pre-striped pit remain… so there’s a lot of cost savings and it’s in the tune of around $50 million being saved by using some of the previous infrastructure on the site.”

The Copper Flat project is slated to run for 11 to 12 years. 275 to 300 people will be directly employed at the site (including truck drivers, engineers, surveyors, geologists, drillers, etc.), 700+ jobs will be created indirectly in the community and state, and 600 employees will be required for the 18 to 24 month construction of the site. Using conventional hard rock open pit mining methods, THEMAC hopes to extract roughly 100,000 tons of copper concentrate per year in the first five years. Gold, silver and molybdenum will contribute another 20% of the value of the mine. The total cost to construct the project is projected at approximately $400 million, and the projected gross revenue for the life of the mine is $2,370,735,000 (USD).

THEMAC Resources is also committed to sustainable practices and working with the local community to ensure that there’s is not just a lucrative project but an ethically responsible one as well. In September 2011, the Arrowhead Center at New Mexico State University produced a socioeconomic study that would identify the impacts of the Copper Flat Mine in Sierra County. The report was completed in 2012 and concluded that the mine would generate a larger than average number of jobs, as well as substantial monies for the state and county in taxes.

In 2012, the Bureau of Land Management (a federal agency that owns part of the land) began work on an Environmental Impact Study (EIS), and held a series of public meetings as a way to address the community’s concerns. While there was a lot of support for the mine expressed by community members, Smith notes, “there is some concern, and I think they’re common to any mining operation anywhere in the world. They generally focus on water and quality of life… THEMAC Resources is working with the community on means and methods we can use to mitigate impact. This hasn’t been finalized, but if there needs to be materials and supplies in the school system to absorb the students that will come, then we’ll work with the schools to help provide that or find means for that. We’ll take action to help prepare the roads for the traffic that will happen. Our operation will be timed so that deliveries and shift change don’t cause significant impact to other businesses.”

In addition, the company plans to take measures to maintain the quality and quantity of water in the community. Using data from a large pumping test, groundwater models have been developed to allow THEMAC to make predictions about how their operations will affect the local water system, and they intend on monitoring water levels as the project moves forward. To address concerns about water quality and contamination, THEMAC will line their tailing facility to prevent process solutions from leaking into the shared water supply. The company also intends to economize on water by employing water conservation methods that are common to mining projects in arid regions. 70% of the water needed will be recycled.

Finally, part of THEMAC’s sustainability plan centers around concurrent reclamation. “As we develop an area of the mine, for example in construction, we’ll need areas to lay down equipment, materials, and supplies. When we’re done with construction and we don’t need that area any more, we’ll go back in and scarify it and spread topsoil on it or growth media and seed it and re-vegetate the area. That saves water, it provides habitat for the wildlife, it reduces the potential for dust, which effects air quality. So we’ll do what we can to just limit our footprint, and as we go forward, we’ll continually evaluate.”

Presently, THEMAC is working toward completion of a draft of the Environmental Impact Statement, and they hope to begin construction on the site sometime in 2016.


Resources Quarterly - Fall 2014

This article originally appears in the Fall 2014 edition of Resources Quarterly.

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