Here is a nice little arithmetic problem for those readers who like numbers.
If we assume, as NMCC does, that the only change in operation at Copper Flat from its original plan is to use filtered tailings storage instead of a tailings pond, then most its own estimates of water needs and uses should be the same. That means we can look at the numbers in NMCC’s water budget as summarized in BLM’s 2019 Copper Flat Copper Mine, Final Environmental Impact Statement (FEIS) to see if filtered tailings storage saves enough water to mine at Copper Flat.
Since the MMD hearing on September 17th considers an operational plan for processing 30,000 tons of ore per day, we look in the FEIS under Alternative 2, the 30,000 tpd alternative.
There we find: Total water use for mining: 22,210 AFY.
That is made up of total water for ore processing: 21,242 AFY and
total non-processing water use: 968 AFY.
The non-processing water use (dust control, sanitation, equipment washing, etc.) is not recycled. So, we are concerned only with the processing water. NMCC using wet tailings in their original plan claimed that they would recycle 15,504 AFY of the 21,242 AFY. Therefore, they had planned to recycle 72.9% of the process water (15,504 AFY/21,242 AFY = 72.9%; the text says 72%). That is already a lot.
Total process water – recycled water = Process water lost that needs to be replaced
2l,242 AFY – 15,504 AFY = 5,738 AFY.
Add that to the non-processing water lost (968 AFY), and you will get 6,706 AFY, the amount of fresh water NMCC needed to pump from their wells using wet tailings storage (but recycling 73% of process water). This loss of 5,738 AFY is broken down by NMCC as water left in the tailings (4,973 AFY), water evaporated (752 AFY) and water left in the copper concentrate that gets shipped to the refinery.
Let’s see what how these numbers work if NMCC uses “dry stack” tailings:
Assume NMCC increases recycled water from 73% to 90% of the process water. This is a high estimate since between 3% and 5% of the process water is not retrievable being evaporated or in the concentrate. Also, the tailings need some wetness because it needs to be compacted to make the stacks stay in place. Remember that dry tailings are very fine particles, face-powder consistency, and no one wants it blown around. Even with this high percentage of recycling, it is difficult to imagine that the increase of 17% is sufficient to drop the fresh water need from 6,700 AFY to the 1,100 AFY water rights the miners now have. But we can actually calculate what a 90% recycling means.
If NMCC is able to recycle 90% of the process water, then it will lose 10% of the process waters. That means annual water lost in ore processing itself (ignoring other consumptions of water like dust control) is 10% of 21,242 AFY or 2,124 AFY. If 2,124 AF of water is lost every year, then NMCC needs to pump 2,124 AFY from its wells, which far exceeds the water rights of 1,100 AFY available for replenishment. In this scenario, 1,359 AFY are left in the “dry” tailings (2,124 AFY – 765 AFY irretrievable evaporation and concentrate moisture). This estimate does not include dust control, sanitation, equipment washing or other consumptive uses and losses of water from the system. We do not see sufficient water savings, then, to allow the proposed operation for mining 30,000 tpd of ore.
Total water loss = processing water loss + non-processing water loss = water rights needed
3,092 AFY = 2,124 AFY + 968 AFY = 3,092 AFY
Even with what I’ve described as extra-legal water harvesting, the project is not feasible as planned.
Since NMCC’s numbers are the basis of this calculation, we must assume that NMCC knows what its available water supply can and cannot do. Why, then, has it applied for an essentially undoable project?
It clearly cannot intend to mine Copper Flat in the manner described in its application to MMD.
NMCC does not have the water to implement its plan; though its rights to 1,100 AFY of groundwater might be sufficient for a much smaller project (less than 10,000 tpd). But water rights are not the only thing NMCC lacks. It does not have the electrical power. Most important, it does not have the financial capacity at this time to do so.
In its last financial statement filed with the venture part of the Toronto Stock Exchange (Themac Resources Group Ltd. Condensed Consolidated Interim Financial Statement, March 31, 2025), NMCC’s parent company declared assets of $95 Million (CAD) and liabilities of $192 Million (CAD) resulting in a negative working capital of $97 Million (CAD) or about negative $71 Million (USD).
With that kind of indebtedness, it would seem difficult for NMCC to find the $364 Million (USD) which in 2019 it declared in the FEIS to be the cost of constructing Copper Flat Mine (not counting the additional construction of a huge filter factory for the revised tailings storage process). Any investor would have to consider that this marginal mine operating at best at a production rate of 10,000 tpd would have an operating life close to 40 years. With intermittent closures resulting from the volatility of copper prices, the investment may wait a century for full return.
The filtered tailings operation not only adds enormously to the construction costs but also to the operating costs since it requires the added equipment for spreading and compacting the filtered cakes, the added labor costs of spreaders and water diversion managers, and the added engineers to constantly monitor the tailings and the stacks. And, of course, the added energy costs, which I’ve estimated boosts the electric bill by a quarter or a third. These costs have to be offset by the income stream provided by selling copper, an income stream reduced (at best) to 1/3 that of the planned 30,000 tpd production. Is this project feasible?
During the consideration of NMCC’s original application, I submitted to the Director of MMD an argument that the application should be denied on the grounds that the application was frivolous and the state should not be party to what was essentially a business ploy to enhance the value of Copper Flat Mine. This examination of NMCC’s present lack of resources for reopening Copper Flat Mine makes that intent even clearer.
The insubstantiality of NMCC’s application results from NMCC’s failure to find sufficient water to mine pursuant to its 2020 Agreement with MMD. In 2021, NMCC’s owner, Tulla Resources, leased 2,400 AFY water rights and applied to the State Engineer to transfer the rights to its production wells for use at Copper Flat Mine. The application was protested, and the Office of the State Engineer held a judicial hearing.
When the State Engineer denied NMCC’s application to transfer leased water rights to its production wells in August, 2025, Copper Flat Mine became worthless as a mine since there was insufficient water rights for an operation and any additional water rights could not be transferred for use at the mine. The OSE hearing determined that even pumping 1,400AFY at its production wells would have entailed significant harm to other water rights including rights in the Rio Grande and harm to the general welfare of the state. No mining could ensue at Copper Flat Mine under the original MORP. Using the previously rejected filtered tailings alternative (see FEIS, p. ES-7) may be an attempt to restore the mine’s value.
Before the SE’s decision (August, 2025), NMCC would have been aware of the probable outcome to the protest hearing on its transfer application. All final briefs were submitted by March, 2024, and the arguments against approval of the application were overwhelming. All protestants including the Interstate Stream Commission, Elephant Butte Irrigation District, Camino Real Regional Utilities Authority, the Sierra Club, GRIP, Turner Ranch Properties, neighboring well users at both the transfer-from site and the transfer-to site, and the OSE’s own Water Rights Division argued against granting the application.
However, the outcome of the November, 2024, presidential election may have given NMCC hope that the market value of Copper Flat Mine could be salvaged given President Trump’s previous favoring of copper mining during his first term in office (that was when the Department of the Interior approved the federal mining permit). A month after the elections, Themac Resources’ governing board established a special committee to investigate the possibility of the company going private. See the whole narrative of Tulla Resouces buying all of Themac’s shares not already in its possession in order to change the company from a public to a private company in the Circular which the board sent to its shareholders prior to the shareholder meeting to authorize the change: https://www.sedarplus.ca/csa-party/records/document.html?id=9280dd036bbee78ad3b6d45d46e2d809013131e0b7ca37bf2e0ef5f5da59775f.
The board declared Themac’s dire, imminent insolvency as reason for going private. Themac was threaten by its subsidiary NMCC’s enormous debt to Tulla Resources; it had limited alternatives for funding; there was little prospect of any liquidity relief; and it faced difficulties with permitting. Absorbing Themac into Tulla as a private company preserved Themac from insolvency
As a business decision, protecting Themac from insolvency benefited Tulla Resources. Tulla Resources already owned 75% of Themac shares, and thus owned NMCC, its own debtor. Since the loan Tulla had given Themac carried an interest of 20% that was never paid, the annual unpaid debt was quite large. It now dwarfs the loan itself. That unpaid debt could be used for annual tax deductions by Tulla. Themac’s bankruptcy would have ended that benefit.
Themac’s continuing existence requires keeping the mining project going for two reasons. First, Themac’s only real assets were the 1,100 AFY of adjudicated water rights (worth about $9 Million using the estimated cost of New Mexico’s buyback costs in the Lower Rio Grande Litigation Settlement). Having gone through a lengthy litigation turning on the issue of abandonment, Themac would have been acutely aware that in order to maintain validity in water rights in New Mexico those rights had to be exercised or, barring water use, there had to be evidence of the attempt to use water. Applying for a mining permit would be prima facie evidence of the intent to mine, keeping both forfeiture and abandonment at bay.
Second, the pursuit of permits is a means of valorizing the project, that is, to restore market value to the mine. Using a filtered tailing process was the only way to salvage the mine’s value as a mine. Water savings are certainly a public relations hit, but there was no proof of its viability. The applications to the MMD and to the NMED, if successful, would demonstrate publicly that the lost value was recoverable. Permits in hand would allow both marketability and access to investments. As a business decision, the application to the MMD might be problematic, but there was nothing to risk.
Tulla’s absorption of Themac, and thus of NMCC, also resolves a permitting difficulty. With Themac’s enormous debt the bonding for a reclamation assurance was practically impossible to find. The corporate rearrangement seems to have solved that dilemma.
It is possible, speculatively, that the application before MMD results from business rather than mining considerations. It may even be possible that the change to filtered tailings storage was merely to bolster public relations, since it seems clear that there is insufficient water for mining even with its water savings. If that were true, the MMD should carefully ascertain whether the proposal is feasible in all aspects and if the applicant is willing and capable of carrying out its plan of operation. What, for example, is the price of copper that would allow mine operation and at what output? Does the mine have sufficient water rights for that production?
While New Mexico recognizes the value of mineral extraction, that value is realized only if there is actual mining. If an application for mining is only a gleam-in-the-eye hope, the state is not obligated to permit a failed project. The state ought not allow its permit to be used to enhance the marketability of a failed project to the detriment of possible investors in mineral projects throughout the state. Nor should the state further an attempt to preserve unused and unusable water rights which have only been used for 3 months 44 years ago, especially at a time when the state must retire 18,200 AFY of rights in this water basin to satisfy the Lower Rio Grande Litigation Settlement.
If NMCC had the water, the means, and the will to mine quickly to minimize market volatility, then one might consider the balance between the benefits and the harms to the public worthwhile (though NMCC admits that mining entails impairment of other water rights), but NMCC does not have that capacity, and it gives no indication that it will be able to find such resources. The MMD may not want to treat the updated MORP as a bona fide application to mine.