VANE Minerals says federal embargo largely anticipated

VANE Minerals (LON:VML) confirmed this morning that its Wate and Rose uranium projects are unaffected by proposed legislative changes that will see the withdrawal of 1 million acres of federal land in northern Arizona from mining activities.

The group had already significantly reduced spending on the areas in question, and will maintain a small exploration programme on state lands, which includes Wate and Rose. 

Chief executive David Newton said: "Whilst the confirmation that these federal lands are being withdrawn from mining activity is disappointing, particularly given the strong local and regional support for mining from various governmental offices, it was not unexpected and the company has already adjusted its business plan accordingly to focus predominantly on its copper exploration programme, supported by its gold and silver revenue generating activities in Mexico."

Of the affected areas, VANE said it has legal rights on some 680 mining claims covering a total of 14,000 acres.

Attempts are being made to appeal the 20-year federal mining embargo being implemented by US Secretary of Interior, Ken Salazar.

VANE at present is on a high-impact exploration programme in America’s copper belt.

According to Allenby Capital the discovery of a porphyry deposit from one of 22 untested targets in Arizona and New Mexico could be utterly transformational.

Using a sliding scale depending of the size of deposit uncovered, the shares could be worth between 2 pence for a discovery with 200,000 tonnes of contained copper through to 104 pence for a 10 million tonne resource, it said. 

“The discovery of a sufficiently mineable copper porphyry will have a significant positive impact on the share price,” added analyst Neil Shah in a research note issued yesterday. 

The area of focus of VANE’s copper exploration activities is the Arizona-New Mexico border, which is home to 60 per cent of all US production of the metal.

And its geologists have access to an extensive database of the area compiled by Freeport McMoran.

In directors Clark Arnold and Steven Van Nort they have the grey-beards with the knowledge and expertise required to successfully plunder this mountain of information. 

Van Nort, taking early retirement from Freeport, negotiated the exclusive access to more than 7,000 world-wide exploration files assembled over 85 years.

VANE is concentrating its drill activities on the porphyry copper systems of the south-west US, and its targets on either side of the Arizona-New Mexico border. 

The biggies to date, deposits such as the Morcini and El Chino mines, are outcropping at surface. 

There are more than 30 in total.  And the theory suggests there’s a similar number hidden beneath the covered terrain of this metallogenic province. Around 60 per cent of this area is covered.

Using the Freeport database and other proprietary data VANE is identifying potential hotspots and drill testing them. 

It is rapid and, at $100,000 to $150,000 a hole, it is relatively low cost.

The only problem thus far is VANE has drilled two targets and found nothing.  However this is two of 24 potential targets. 

It plans another six to nine in the next 18 months, starting with McGhee Peak in New Mexico, which was finally given the green light by the local mining authorities on October 31.

A successful hole would be utterly transformational, chief executive David Newton revealed in a recent interview. 

“We could spend as little $150,000 on exploration and end up with something worth between US$2.2 and US$40 billion,” he said. 

The valuations quoted by the VANE boss are benchmarked on the monster deposits that have already been discovered in the region and based on the current price of copper. 

It’s not the most rigorous mine maths, but it gives a hint as to the scale of the opportunity.  

Suffice it to say a discovery will see the world’s big miners sniffing around with Freeport probably at the head of the queue.