Major miner’s investment jumpstarts copper project |

Major miner’s investment jumpstarts copper project

John Seelmeyer

A stalled copper project near Yerington got a shot of momentum last week as a major mining company agreed to spend at much as $138.6 million on exploration and other work during the next four or five years.

Quaterra Resources Inc. said it struck a deal with a subsidiary of Freeport-McMoRan Copper & Gold, a $20.9 billion (annual revenues) company headquartered in Phoenix.

Freeport-McMoRan will invest $2.5 million in the Lyon County project — its center is the old Anaconda copper pit just northwest of Yerington — during the agreement’s first year.

If Freeport-McMoRan decides to continue, it can invest a total of about $40 million to earn a 55 percent stake in the Quaterra holdings at Yerington.

For another $100 million in funding, Freeport-McMoRan can earn a 75 percent interest in the property.

For Vancouver-based Quaterra, the transaction comes in the nick of time as it struggles to survive.

“Our cash position is minimal, and we are working on ways to top off the treasury,” its chief financial officer, Scott Hean, told investors last week.

The publicly held company posted a loss of $467,659 in the first quarter, and its strategy has been simple: Raise cash by selling off other assets such as uranium properties in Arizona, Utah and Wyoming and focus its attention on the Yerington copper products.

But even at that, Steven Dischler, Quaterra’s president and chief executive officer, says the company’s last few quarters have been “very challenging.”

Quaterra Resources faces the woes common to all small mining companies that can’t get much love from investors any more.

For companies focused on copper, the challenges are all the greater because the $3.05-a-pound price for copper on world markets last week was down by more than 30 percent from its high in early 2011.

Although the deal with Freeport-McMoRan might lead to Quaterra giving up 75 percent of its interest in the Yerington property, Dischler said Quaterra’s board believes the company is better off aligning itself with a strong partner who can bring the complicated project to reality.

He noted that Quaterra continues to have good relationships with the community in southern Lyon County.

Dischler said the community is unlikely to see much immediate activity at the Yerington properties because the first year of the Freeport-McMoRan deal would be spent largely on due-diligence such as double-checking title to land and water holdings.

Along with the centerpiece open-pit mine that was operated by Anaconda Corp. for 25 years beginning in 1952, Quaterra also has interests in a couple of neighboring copper properties and owns about 8,700 acre-feet of water rights.