Chile Mining Technologies, based in Chile, has copper as its principal “pay metal.” It has refined the EW process in a way that permits it to be used at relatively small mine and/or tailings sites. By using Minimum Intrusion Non-traditional Input plants (MINI), CMT is able to build scalable, less expensive plants closer to source materials, and operate where it is not economical for larger open-pit mining companies to operate. As a result, CMT is able to reduce costs and operate profitably with smaller deposits.
Since starting construction in the fall of 2008, CMT has successfully completed its first scalable MINI plant, the Ana Maria plant, located about 30 km northeast of the town of Illapel, in the mining district of Matancilla. While CMT saw significant progress toward its overall business plan during the first quarter of fiscal 2010, the company also addressed several short term challenges. First, CMT management, recognising additional opportunities with the Ana Maria plant, chose to take the facility off-line in May in order to increase the facility’s overall capacity by 50%.
Management determined that the available supply of minerals at the Ana Maria plant (including deliveries from third parties) was sufficient to provide greater long-term benefits from the added capacity than the short-term challenges of taking the facility off-line. The upgrades took approximately 3 months and cost approximately $800,000. The facility has now resumed production and the first batch of copper is expected in early September 2010.
CMT determined that taking the facility off-line while still ramping its production would result in significantly less lost revenue than had it taken the plant off line toward the end of its current fiscal year. The upgrades increased monthly output capacity from 120 to 180 t/month. Assuming a copper price of $3.25/lb, the spot price of copper on the LME on August 24, the added capacity alone would result in approximately $430,000 of additional revenue per month. Therefore, due to the additional opportunity, management determined the long-term benefits of the added capacity outweighed the short-term disadvantages of taking the plant off-line.
Management has been has been working with ENAMI, the state-run mineral company in Chile designated to support the mining industry (particularly small-scale operators), to amend the contractual relationship between CMT and ENAMI to extend more flexible terms to CMT and potential support for the company’s operations. In addition, it has retained a US based Vice President, Gerry Pascale, an expert at guiding emerging companies through the process of operating as a publicly traded US company, who will assist the Company by providing financial management expertise and advisory services. The company has also elected Bill Thomson to serve as a member of its Board of Directors and appointed him to serve as its Audit Committee Chairman. Thomson is a seasoned professional with a long history of experience as a CPA, financial executive and Audit Committee Chairman of publicly traded companies, including Canadian companies. The Company continues to make progress toward its Canadian listing, and is working closely with its legal and financial advisors, and the TSX toward this goal.
As discussed, the Ana Maria plant has resumed production and is ramping up its production levels. Management expects the plant to be operating at full capacity by December 2010. In addition, construction is 65% complete on the second plant, Filomena. This facility is expected to begin production by November 2010 and the Company anticipates that it will be operating at full capacity by January 2011. At present, Management expects the Company to be cash flow positive by December 2010.