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6/13/2013 6:00:00 AM
Copper mining plans face financial obstacles
A shot of the solvent-extraction/electro-winning plant, which is used to pull copper from oxidized copper ore bodies, at the Chloride Copper Mine.Courtesy
A shot of the solvent-extraction/electro-winning plant, which is used to pull copper from oxidized copper ore bodies, at the Chloride Copper Mine.

Kim Steele
Miner Staff Reporter

KINGMAN - Despite negative company filings, an $11.2 million deficit and a serious lack of funding, Sierra Resource Group's director says he is still pursuing plans to re-open the Chloride Copper Mine.

"We're moving forward and intend to complete this project," said Sierra CEO Rod Martin. "We've had some delays, but what company doesn't?"

Martin said the company recently contracted the firm CDM Smith to handle its air quality permit and all electrical work associated with the mine and building a substation there. CDM Smith oversaw the transfer and modification of the mine's existing aquifer protection permit, which was handled through the Arizona Department of Environmental Quality. Last year, the Bureau of Land Management accepted the company's Mine Plan of Operation, which was completed by Paul C. Rizzo Associates, Inc.

Sierra anticipated hiring up to 40 employees and opening earlier this year, but production has has been placed on hold because of financial problems with the company.

According to the company's annual 2012 and first-quarter 2013 filings with the U.S. Securities and Exchange Commission in Washington, D.C., in April and May, the company has not had any significant revenue since its inception in 1992 and there is no assurance it will get the financing necessary to pursue exploration activities.

The reports state Sierra had a deficit of about $11.2 million and a loss of $933,540 as of Dec. 31, leading its auditors to issue a "going concern opinion," which means there is substantial doubt about whether the company can continue as an ongoing business. The reports note that proceeds from copper sales at the mine will be used to cover expenditures, but revenue may not be generated until next year. That means additional funding is paramount.

"If we do not achieve the necessary financing, then we will not be able to proceed with other planned activities, including our planned exploration activities, and our financial condition, business prospects and results of operations could be materially adversely affected to the point of having to cease operations, which would likely cause our investors to lose their entire investment," stated both reports.

That news disturbed Talmadge Merit, an investor from Maryland who has been calling local state agencies for months to find out the latest news on the mine. Merit said he learned about the investment opportunity from a friend and bought into the idea about three years ago. Merit said he has plenty of questions but few answers.

"It's a money situation, from what I understand, where the company doesn't have enough funds," said Merit. "It has so much debt but not enough cash to move ahead. I've been waiting a long time for Sierra to get going with the mine. There have been a lot of promises during those years, but no action."

Martin said the company recently entered into preliminary discussions about a possible agreement where the company's readily available ore already stockpiled at the mine would be processed away from the site. Martin said special permits would be required, which the company is already exploring.

"If a deal like this can be put together, Sierra could effectively be positively cash flowing much quicker than originally planned," said Martin.

Ruben Sanchez, field manager for the Bureau of Land Management Kingman Field Office, said the agency has been working with Sierra on its environmental assessment but progress has stopped for now. Sanchez said the assessment is almost complete, but he isn't sure when it will be done.

"The company is going through some internal restructuring, and that's where the delay is right now," said Sanchez. "We need to know what direction the company is taking before we do anything else. The ball is in their court."

Sierra is a Las Vegas-based exploration and mining company seeking to develop gold, silver, copper and other mineral resources. It owns 100 percent of the Chloride Copper Mine, which a 2006 report estimated contains 27 million pounds of copper. The company plans to re-open the existing plant, formerly known as Emerald Isle, and use open-pit mining to produce up to 5.4 million pounds of copper cathode each year. Sierra purchased the mine, which was managed by 10 different companies from 1917 to 1999 before it was shut down, in April 2010.

The site is about 15 miles northwest of Kingman and about four miles south of Chloride. Sierra has acquired 450 acres of mining claims on the property, which sits on Old Boulder Road and is located within the Walapai Mining District.

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Related Stories:
• Chloride Copper Mine clears regulatory hurdles
• Chloride split over copper mine's revival

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Reader Comments

Posted: Friday, June 14, 2013
Article comment by: Site Steward

Re Vock Canyon, J. Stanton and justanobody sr:

Yes, I agree with you all and thank you very much validating my points by explaining it other ways, so that the BLM can realize that is their only real ulterior motives.

By the way, all of the mining claims of the former Emerald Eisle open pit mine are on public land, as well as all of Section 22 T23N R18W, so I do not think agriculture use would be permissible, nor would a reduced tax rate apply in this case because it is public land, not private, as in the case of Jim Rhode's "funny" dust causing farm in Golden Valley.

Again, I can only hope the BLM realizes all of that.

Posted: Friday, June 14, 2013
Article comment by: vock canyon

A $900k loss? Hmmm sounds like some's paycheck got paid. This whole thing smells like a investment scheme to milk money out of investors to fill some ones pockets. What a suprise, a big mine investment oppurtunity in the desert. oooooo ..... Next thing you know they will plant a farm on the land to get a reduced land tax rate. (-:

Posted: Thursday, June 13, 2013
Article comment by: J. Stanton

Bad reporting. Period. The "deficit", wrong term BTW, is a carryover loss that will be deducted from future revenue and is an accounting tool which will save SIRG millions in taxes. It does not represent a real cash loss.

The "going concern" language in their filings is boilerplate language for start-up companies with no revenue and legally must be included.

Posted: Thursday, June 13, 2013
Article comment by: Site Steward

"We're moving forward and intend to complete this project," said Sierra CEO Rod Martin. "We've had some delays, but what company doesn't?"

Sure, Mr. Martin, because you desperately need a tax write-off scheme and or for some other ulterior-motive. Who are your trying to fool?

I can only hope that the BLM realizes that and does not allow you to destroy the earth and waste millions of gallons of water like the nearby Mercator Minerals mining company does.

Again, the Emerald Isle mine was shut down after WWII and was reopened by the El Paso Natural Gas Company around 1967, who abandoned the mine in 1974, leaving the open pit mine in it's present-day horrible environmental mess and hazardous condition.

Posted: Thursday, June 13, 2013
Article comment by: justanobody sr

is anyone aware of how much water these type of operations use?
they will use all the water until its dry, then move on to another site and repeat its damage!
water is NOT an unlimited supply, someday the people on earth will realize it, hope its not to late!

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