DRAGOON — The sale of Johnson Camp Mine, an open pit copper operation located in Dragoon, is expected to close this week, preventing the mine’s shutdown and making way for about 150 new jobs, according to John Travassos, the mine’s environmental, safety and property manager.

In addition to the influx of new jobs, the mine’s sale has averted job losses for 27 current full-time employees.

“Payroll will be worth $7.9 million and we anticipate injecting about $5 million in additional goods and services in Cochise County and other regional economies once full scale operations are in place,” said Travassos. “This sale is fantastic news for the area.”

Rescued from closure.

Formerly owned by Nord Resources Corporation out of Tucson, Johnson Camp Mine has been in receivership since Nov. 18, 2014 after Nord’s principal secured lender, Nedbank Ltd. refused to refinance or renegotiate the terms of a $52 million debt. Instead, Nedbank filed for a court appointed receiver in Pima County Superior Court, with Christopher Linscott as the receiver.

Through the receivership order, Linscott was responsible for marketing the mine’s assets. There were four interested parties, with Mars Resources, LLC as the purchaser. Mars is an Arizona corporation wholly owned by parent company PSONS, Ltd., an international company with mining interests in Brazil and Zimbabwe, Africa.

In order to keep the mine open, Nedbank agreed to continue funding limited operations while in receivership, advancing more than $1.25 million on an as-needed basis. All incoming revenue and outgoing payments were processed through Linscott during that time.

An initial shutdown date of April 30 was extended to May 14 with Nedbank’s overall financial outlay at more than $53 million by the time the deal was completed. Negotiations hit a hurdle when it was discovered property taxes owed Cochise County were nearly $1 million more than had been anticipated. As the sale came down to the wire, a resolution between the buyer and Nedbank was beginning to look dismal. However, a last-minute meeting organized by George Scott of Southeast Arizona Economic Group, Linscott, county officials and other interested parties on April 21 in Bisbee resulted in Nedbank’s agreement to pay the remaining tax debt.

What happens now?

The $8.4 million purchase price paid by PSONS satisfies property taxes, with the remainder of the proceeds partially satisfying Nedbank’s secured claim of $53 million. According to court documents, “the assets were sold free and clear of all liens, claims and interests.” In addition, PSONS “will not be liable for any liens, claims, debts or other liabilities of Nord Resources Corporation or arising from the defendant’s assets or operations.”

The money from Nedbank was invested to construct and develop new facilities at the Johnson mine. According to Travassos, millions of that money went into construction of a new crushing and conveyor plant, but a declining copper market caused Nord to close the mining side of the operation in 2010. After mining ceased, copper production came through ore that had been previously mined and placed on leach pads, which is how the mine’s copper is currently processed.

“There is a confirmed 300 million pounds of copper to be mined, valued at  $1 billion in today’s market,” said Matt Williams, the mine’s minerals processing manager. “The life of the mine right now is anticipated to be between 13 and 15 years. With additional drilling, we anticipate it could go even longer than that.”

With suspension of Johnson’s mining operations in 2010, more than half the workforce was laid off, with the company continuing to downsize to the current 27 employees.

“As we look at starting mining operations again, we anticipate we will be able to draw experienced people from surrounding mines,” said Travassos. “In terms of blue collar workers, this is a good opportunity for hundreds of people. We’re hiring all the way from base level employees to higher trained technical professionals.”

The mine’s history:

The Johnson Camp Mine is a working copper mine located on the eastern slopes of the little Dragoon Mountains, about 65 miles east of Tucson. It consists of two open pit mines, the Burro and the Copper Chief and an on-site production operation. The mine has a long history in the area, with the first ore flow reported in the 1880s. When fully operational, the mine employed more than 100 workers. In the 1950s, copper prices fell and zinc, which was separated from copper concentrates, became the more profitable ore mined at Johnson. However, in 1957 a declining ore market caused the mine to cease operations until it reopened in the mid-1970s with the establishment of the two open pits.

Nord Resources Corporation acquired Johnson Camp Mine from in Arimetco, Inc. 1999, with the Johnson Camp property as Nord’s principal asset. The approximately 3,000-acre property includes the two open pit mines and a production facility that uses a solvent extraction, electro-winning (SX-EW) process for extracting copper. In a summary analysis of its operations, Nord addressed the company’s 2010 decision to suspend its active mining and ore crushing operations, with all copper production coming from the leaching pads, which has continued for the past five years.  

In a recent news release generated by Nord, the company’s Chief Executive Officer Wayne Morrison attributed Nord’s deteriorated financial condition to “a reduction in copper production due to lack of operating solutions,” as well as “a weakening in copper prices.” Morrison goes on to explain that the company’s inability to generate sufficient cash to service its working capital requirements forced management and principal shareholders to appoint a receiver, Linscott.

Expectations of the sale to Mars Resources will be finalized on May 5.