Mining in Patagonia

Arizona Mining Inc., a Canadian company, is planning to build an underground mine in the foothills of Red Mountain, about six miles south of the town of Patagonia in Santa Cruz County.

Canada-based Arizona Mining, owner of the controversial Hermosa-Taylor zinc-mining project in Santa Cruz County, has agreed to sell its remaining shares to a current minority owner based in Australia.

South32 Limited, based in Perth, owns 17 percent of Arizona Mining’s stock and has agreed to acquire the remaining 83 percent in an all-cash offer of $1.3 billion, or 50 percent more than the shares’ closing price on June 15, the companies said.

The deal, which is subject to shareholder and regulatory approvals, is expected to close in the third quarter of this year.

Directors and officers of Arizona Mining, who collectively own 34 percent of the company’s issued common shares, have agreed to vote for the deal, and the company’s voting directors have unanimously recommended that shareholders vote in favor of the transaction, the companies said.

Arizona Mining, which is based in Vancouver, says the Hermosa Project would become one of the world’s biggest producers of zinc, producing some 946 million pounds per year.

The mine also is expected to produce significant amounts of lead and silver, along with manganese, and a concentration of copper also has been found in some areas.

Arizona Mining recently released a study that found the planned zinc and lead mine near would create several thousand jobs in the depressed area and pump $676 million annually into the state’s economy.

But an earlier plan to dig an open-pit silver mine partly on federal land near the site in the Patagonia Mountains was dropped after environmentalists filed suit challenging the permit issued by the U.S. Forest Service, which later revoked the permit.

Arizona Mining has since proposed an underground mine, known as the Taylor project, which would have a much smaller footprint on private land acquired by Arizona Mining and needs only state permits to begin operation, with a goal of starting production by 2020.

Though the Patagonia Mountains were mined extensively from the 1850s until the 1950s, the Hermosa-Taylor project — which has been vehemently opposed by local environmentalists but has won strong support from Gov. Doug Ducey — would be the first mine to open in Santa Cruz County in decades.

Opponents, including the Patagonia Area Resource Alliance, say the mine threatens both the supply and quality of the area’s groundwater.

Contact senior reporter David Wichner at dwichner@tucson.com or 573-4181. On Twitter: @dwichner. On Facebook: Facebook.com/DailyStarBiz

Senior reporter covering business and technology for the Arizona Daily Star/Tucson.com