June/July 2006

Quadra Mining – Dressed for success

By C. Chen

With the mining industry’s current peak metal prices, copper and gold enjoying some of the highest increases, and the tremendous amount of consolidation occurring within the industry, many of the large companies have assimilated the smaller ones resulting in a distribution that tends towards either extreme. And it was in this milieu that William H. Myckatyn, CEO and director, and Paul M. Blythe, president and director, created Quadra Mining Ltd. in May 2002.

Quadra was forged specifically to fit an emerging niche opportunity. With only around a dozen junior to mid-tier, small cap companies in existence, Myckatyn and Blythe formed Quadra in an effort to take advantage of the paucity of companies in that range and, at the same time, make the most of the available opportunities out there for that sector. “There are assets out there that just don’t fit the profile for the huge companies,” explained Myckatyn. “These projects appear to be perfectly good businesses but they just don’t fit the bill.” It’s a niche with many opportunities and a different level of competition for these properties that fly below the radar of the majors. For Quadra, it seems like it’s about finding that optimal fit.

Myckatyn and Blythe initially became friends working together at Gibraltar and a number of other projects. “In 2002,” Myckatyn reminisced, “we sat around and looked at the mining scene. Copper was hovering at the 75 to 85 cent range when we started. We also saw a lack of projects on the drawing board. That’s when we started Quadra and, working from our homes, went looking for a mine to buy.”

Becoming a mid-tier player was an intrinsic part of their business plan. They planned to focus their attention on North America, South America, and Australia, the geographic areas they have had the most experience with. “We had a good match of skill sets and combination of technical expertise and market exposure,” said Myckatyn. Whether it was due to their complementary talents or Quadra’s fit with the industry, they raised CAN$145 million in 2004, one of the largest financings in the resource sector that year.

The Robinson mine in eastern Nevada was the property Quadra was founded on. That area has known mining since the early 1900s, having produced in the area of four billion pounds of copper and 2.7 million ounces of gold between 1908 and 1978. Initially, Magma Copper started construction of the project in the mid-1990s when copper was at $1.20. BHP Copper Inc. subsequently acquired Magma during the construction. Three years later when the mine was shut down, copper and gold prices were $0.64 per pound and $261.00 per ounce, respectively. The facility, reportedly, cost $480 million to build. BHP kept it on care and maintenance for five years until it was acquired by Quadra for $14 million in 2004.

“We got the mine restarted in record time. We began with a contractor to help us start and were mining within six weeks of acquiring the asset,” said Myckatyn. “We went from zero to 100 miles an hour in about nine months.”

Starting in April with 10 people on site and growing to 400 employees by the end of August, Quadra started the mill and produced their first load of concentrate in October, and got paid for their first shipment in December. In 2005, their first full year of production, they produced 126 million pounds of copper and 81,000 ounces of gold.

Myckatyn describes that period as a time of huge achievements. “We had been able to secure basically a new mining fleet – trucks, shovels, and drills – in the very competitive market. We scrambled to get people and took over mining from the contractor in August 2005. When we started producing our first concentrate in 2004, we realized there was molybdenum in the concentrate and on top of it all the other startup activities, we launched into a feasibility study.”

A molybdenum recovery circuit was designed, permitted, and constructed by the end of 2005 at a cost of just under $8 million. This year, based on rough estimates, they could recover up to 1.6 million pounds of molybdenum with 30 per cent less in the following years.

Recent recalculations have increased the Robinson mine’s expected mine life to 10.3 years based on reasonably conservative costs of copper and gold of $1.15 a pound and $425.00 an ounce. Quadra is currently operating at 200 million pounds a year of copper equivalent with their Robinson mine, and with their outlined aggressive growth plan expect to more than double that in the next couple years.

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