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Now that it has complete control of the Arimetco copper mine in Nevada, Quaterra Resources seeks to reconfirm the historical deposits in the project in order to bring the mine back into production.

10 May 2011

(Kitco News) - Now that it has complete control of the Arimetco copper mine in Nevada, Quaterra Resources seeks to reconfirm the historical deposits in the project in order to bring the mine back into production.

Last week, the Vancouver-based junior miner said it has bought all the assets of Arimetco, Inc., located in the Yerington Mining District, Lyon County, Nev.

The open-pit mine, which was once owned by Anaconda, has sat abandoned since 1978 after Anaconda sold the property. The deal includes 4.2 square miles of patented claims and historic resource estimate of 4 billion pounds of copper. It also includes 8,600 acre-feet of water rights.

Tom Patton, president and chief executive officer of Quaterra, said picking up the mine fits well with the firm’s emphasis on copper in the U.S. The property is right next to their MacArthur copper project, which made it a desirable package.

The property became available when the claim to the mine expired and a prospector offered it to them, Patton said. “We liked what saw. The judge awarded us the property in 2007. After four years of extreme due diligence, we decided it had the right risk-reward ratio. I don’t think we could have gotten it now with the competition out there, but in 2007 no one was looking,” he told Kitco News.

The purchase included a US$500,000 cash payment, 250,000 shares of Quaterra common stock and a 2% net smelter return royalty capped at US$7.5 million on production from any claims owned by Quaterra in the Yerington and MacArthur mine areas.

The immediate task is to convert and expand historical resource estimates into N143-101 eligible resources. NI43-101 is the Canadian public disclosure of information relating to mineral properties. When Anaconda owned the mine, it had 760 holes drilled. The plan, Patton said, is to drill 15 holes in the pit, twinning holes already dug. He’s confident the historical information is accurate. “If we have good correlation, we’ll add those holes to our database, like we did with MacArthur….Anaconda was at the top of the business in its day, so we have every confidence the data is good,” he said.

Because the mine sat unused for so long, it has partially filled with water. Patton said Quaterra is working with the Nevada Department of Resources regarding the environmental issues, but he said that’s not an obstacle. “It’s really not contaminated,” he said.

Patton is excited about the prospects for getting Yerington on line. Exploration is expected to take about two years, and the long-term fundamentals for copper are positive.

“Copper will be tight for 10 to 15 years, based on what’s happening in Asia. All the workhorse mines are getting old. Even Escondida (the world’s highest-producing copper mine, located in Chile) is moving through high-grade into lower mineralization. The problem is not identifying the resource; it’s identifying the resources (with good logistics). That’s why Yerington is so great. It has great infrastructure and in the current regulatory environment it’s cheaper to start up an existing mine, and if you clean up one, even better,” he said.

By Debbie Carlson of Kitco News dcarlson@kitco.com


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