A.e. Araiza / Arizona Daily Star 2007

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The subsidiary of one of Japan's biggest industrial corporations has thrown its support behind the proposed Rosemont mine near Tucson.

Sumitomo Corp. of America — which already has existing investments in Arizona copper mines — has loaned Augusta Resources Corp. $40 million in exchange for the right to negotiate a minority ownership interest in the Rosemont project, Gil Clausen, Augusta's president and CEO, said Tuesday.

Sumitomo, which is an existing Augusta shareholder, has other such deals with copper mines in Arizona, such as its 15 percent interest in Freeport McMoran's Morenci copper mine, Clausen said.

Investors typically seek 10 percent to 30 percent in mining projects, he said.

"They don't want to be mine operators; they look for strong teams," Clausen said.

The $40 million will be used to purchase equipment for the project, he said.

Vancouver, British Columbia-based Augusta has already made significant orders for mining and construction equipment. In May, the company reported planned expenditures of $98 million, including $42 million for milling equipment.

Clausen called Sumitomo "very selective" investors, and said the partnership is "validation of our project."

Officials of New York-based Sumitomo of America did not immediately return calls for comment.

The proposed Rosemont mine site is about 25 miles southeast of Tucson along Arizona 83 and is expected to produce ore for nearly 20 years.

The mine plan is opposed by a coalition of environmental and community groups concerned about the impact of mining on groundwater, among other things.

The 1.2-square-mile open pit would be built in the Santa Rita Mountains on 995 acres of private land, 3,670 acres of national forest, 15 acres of Bureau of Land Management land and 75 acres of state trust land.

Augusta puts the project cost at $782.4 million to build, and it expects to produce 220 million pounds of copper, 4.5 million pounds of molybdenum and 2.7 million pounds of silver for about 18 years annually.

Clausen said the company plans to be in production by 2011.

In April, a fellow Canadian company agreed to help finance the mine in exchange for 45 percent of the silver output for the life of the mine.

Silver Wheaton Corp., also of Vancouver, will make an upfront payment of $165 million once Augusta has secured all necessary permits for the copper mine.