Friday 28th October 2016

Resource Clips

Preparing for the rally

Crown Mining readies its California copper project for the anticipated upturn

by Greg Klein

The timing may well prove fortuitous. Crown Mining’s (TSXV:CWM) Lights Creek copper project really came together in February with a 100% option on Moonlight, making it the largest of three deposits on the company’s northeastern California property. President/CEO Stephen Dunn says it took him a year and a half to persuade Canyon Copper TSXV:CNC to part with the asset. Now Dunn believes his company’s well-positioned to benefit from the upturn that’s forecast for copper in the coming years.

Crown Mining readies its California copper project for the anticipated upturn

Forecasts for the conductive commodity
call for a supply deficit later in the decade.

The 18,000-hectare property comes with a lot of history—not to mention a lot of copper. Mining began in the 1890s, with the Engels and Superior deposits churning out around 161.5 million pounds of copper, 23,000 ounces of gold and 1.9 million ounces of silver during the peak years from 1914 to 1930. The Depression-era copper crash shut down both mines.

Fast-forward to the ’60s, when a Placer Dome predecessor explored the property and discovered Moonlight. But copper “was struggling at 60 cents,” Dunn recalls. “At the same time Placer was working on getting Gibraltar into production. They put Moonlight on the back burner and ended up dropping the entire project when they became a gold company.

“Some former Placer guys picked up the project, which went through a few public companies.” Dunn says he picked up Engels and Superior after one company went bankrupt. Negotiations delivered Moonlight in February.

Engels sits a little over four kilometres east of Moonlight, with Superior in the middle. “The deposits are all part of the same system, the Lights Creek stock, one great big intrusion,” Dunn says. Resource estimates were calculated in 2007 for Moonlight and 2013 for Superior and Engels. Using a 0.2% cutoff, the three deposits total 1.044 billion pounds indicated and an almost equal 1.043 billion pounds inferred. The breakdown for each deposit shows:


  • indicated: 146.5 million tonnes averaging 0.32% for 1,044 million pounds copper

  • inferred: 80 million tonnes averaging 0.28% for 496 million pounds


  • inferred: 54.4 million tonnes averaging 0.41% for 487 million pounds


  • inferred: 2.6 million tonnes averaging 1.05% for 60 million pounds

Crown has Moonlight and Superior under focus, seeing open pit potential in both. Local infrastructure includes a paved road linking Lights Creek with a highway less than 12 kilometres away, about the same distance as a railway. Power lines are about three kilometres away. Dirt roads connect the three deposits.

There’s community support too, Dunn adds. “Every time I’m there people ask, ‘When are you going to open that mine?’ They want it. They want the jobs.”

The company now has to determine how much work will be necessary to take the project to PEA. To answer that, Crown has an outside firm reviewing all data to decide how much, if any, additional drilling and metallurgy would be necessary. That review, expected to finish by September, would help Crown advance Lights Creek as economically as possible.

Crown Mining readies its California copper project for the anticipated upturn

The former Superior mine comprises one of three
deposits in Crown’s Lights Creek copper project.

But for the time being the company’s well-financed, having raised almost $458,000 between April and June. That followed a $120,000 private placement the previous February. Management and insiders hold about 30%.

Looking into the future, Dunn sees Crown as likely bait for a joint venture or takeover.

Copper’s downturn dragged the metal’s spot price from nearly $4.50 a pound five years ago to less than $2 in January, a seven-year low. Since then, peaks and valleys have suggested an upward trend to some observers. The Thomson Reuters GFMS Copper Survey 2016 predicts the surplus continuing through 2018. “Even so, there is no doubting that the current low price environment is sowing the seeds for the next boom as projects are shelved, delayed, sold or abandoned completely,” according to the study.

In March Reuters stated miners and investors were looking at copper projects in anticipation of a deficit by the end of the decade. Bloomberg reaffirmed those sentiments in April, reporting that big miners were hanging onto copper assets while unloading other projects. The conductive commodity proves vital to many uses, not the least of which is electrical expansion in developing countries.

“At $2.50, people will still wonder if the upturn’s real,” Dunn says. “But if copper crosses $3, the takeovers will occur. There aren’t a lot of big copper deposits that aren’t already controlled by a big miner or a JV. If we attract a partner, that will be great. If we can hang around until the takeovers happen, then all the better. Either way, the shareholder benefits.”

He describes Crown as “a cheap option on copper” when comparing market cap with pounds in the ground. “My personal view is that copper’s going to have a hell of a run after this five-year downturn. If you do believe copper’s the place to be, there aren’t a lot of cheap options. We’re one of them. We need copper to move past $2.50 but when it does, Crown is one company that’s going to do well.”

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