(MENAFN- ProactiveInvestors - Australia) This is the most critical time in EMED's (LON:EMED, TSE:EMD) eight year history, chief executive Harry Anagnostaras Adams told analysts and reporters on a site visit attended by Proactive Investors last week to the world class Rio Tinto copper project.
EMED's ambitious but much delayed plans to resuscitate an iconic copper mine and district are now on the cusp of becoming a reality.
After years of corporate 'clean-up' and back-and-forth with regulators and local authorities, the project now requires just two key approvals â€" environmental sign off and something called 'administrative standing'- to move forward.
In elections early this year, the Andalucian government promised that both approvals would start issuing at the end of the last quarter, but investors are still waiting for EMED to reach this vital milestone.
In short, it appears that both permits are capable of conditional approval now, allowing development work to start and potentially allowing commissioning to begin twelve months from now.
While we were there, a number of meetings took place between EMED's technical teams and the government. It seems this is now par for the course, with meetings several times a week.
EMED says it is doing all it can to expedite the process, but even if the government approvals slip to as late as February, Adams told Proactive Investors that the development timetable could still remain intact for the start-up of the first mine and plant at the end of next year.
Administrative standing, an odd-sounding regulatory status unique to Spain, will effectively give EMED the right to access the minerals it owns at Rio Tinto. Broadly speaking it is akin to being approved as the holder of a mining concession.
The authorities have told EMED that no further submissions are required and it has done all that's necessary to satisfy the permit, but it is understood that the minister responsible wants to see the completed environmental sign off before he gives the project the final seal of approval.
Importantly, the conditional approvals of administrative standing and environmental permits will trigger the start of certain physical works, with others to follow during 2013.
This won't be the end of bureaucracy though. Unfortunately, this will continue as EMED will need to process a total of 47 applications for a variety of operating permits and permissions.
Some of these are required quickly; others are needed as EMED moves through the development schedule, and others will be issued only after production has started.
Although this may seem an ominous task, EMED's Bill Enrico - chief executive officer (CEO) in Spain and responsible for permitting - says this is standard practice for many major mining projects and industrial complexes.
Through a staged development, the first mine, the Cerro Colorado open pit, will initially ramp-up to process 5,000 tonnes of copper ore before rising to 9,000 tonnes a year.
At last week's site visit, Proactive Investors learnt that a new phase of exploration could expand these plans.
The Rio Tinto copper project is found at the heart of the Iberian pyrite belt. The mine is located in the middle of what is believed to have been the largest volcanic massive sulphide (VMS) system in the world.
Historically pyrite (a source of sulphur), copper, silver and gold were produced here and over two million tonnes of copper has come out of the mine.
Currently, it has 123 million tonnes of reserves at 0.49% copper, which equates to 606,000 tonnes of contained copper, and resources come in at 203 million tonnes at 0.46% copper for 933,000 tonnes.
All this emanates from an extensive historic database as EMED has yet to drill a hole of its own on the site â€" because drilling is prohibited until administrative standing is granted.
EMED's exploration team, led by chief geologist Ron Cunneen, will be among the first to start work once the permit comes through.
Cunneen's task will be to drill out as much of the area surrounding the Cerro Colarado open pit as possible and to increase reserves before the initial ramp up five million tonnes a year is complete.
The idea is that armed with more geological insight EMED can re-assess the next step in the mine's expansion - possibly bypassing the 9 million tonnes per annum (mtpa) phase altogether - and instead look to an operation of 12.5 mtpa or more.
Cunneen says he's certain his team will find more mineralisation, but the location of the discoveries will be just as important when it comes to EMED's ability to expand the mine in an orderly sequence.
EMED also has more projects in mind that could add further value - including high grade polymetalic deposits, as well as potential sources of precious metals.
While the geologists plot a possible expansion, the operational focus will mainly be on delivering what is already a robust project.
Last week, group development officer Rob Williams, the man in charge of project execution, said that from a technical point of view Rio Tinto's restart was low risk.
EMED is not trying to do anything special operationally, he explained.
The plan is to simply reinstate, and in places modernise, a fairly straightforward and proven processing plant. Some new equipment will be needed, including a modern control system, but the bulk of the mine infrastructure is already in place.
The company is currently working on a new definitive feasibility study to update cost projections, though these are thought to be broadly the same as before.
Assuming 37,000 tonnes of copper in concentrate is produced each year from processing 9 million tonnes of ore, cash costs - the so-called 'C3 costs', being operating plus capital plus closure - are currently predicted at around US$1.80 per pound, with earnings estimated at US$152 million. Project net present value (NPV) comes in at circa US$600 million for the base case on the first mine and US$1 billion on the target case for that mine.
Having spoken in depth with the management team and seen the mine infrastructure that's already in place, it is clear that there are a number of 'moving parts' in the development, but even at this base level the project represents a significant and not too distant jump in shareholder value â€" given EMED's current market capitalisation of just £122 million.
While the precise timing of the sign-off (and consequently start-up) has yet to be determined, it really does seem that after such a long wait something is about to happen.
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