Mercator Minerals Ltd., an operator of an Arizona mine, may wait for copper prices to rise before securing financing to build its El Pilar project.

“There is debt available to the project today, it’s just not on terms that I think our shareholders would be enamored with,” Bruce McLeod, chief executive officer of the Vancouver- based company, said in an interview in Toronto yesterday. “The hedging component at these prices would be too high for us to consider,” he said.

Mercator will study a range of options to fund the project, including combinations of debt finance, off-take agreements, potential partnerships and profits from the Mineral Park mine in Arizona, he said.

The El Pilar project will more than double Mercator’s annual copper output when production begins at the mine. Mercator aims to expand into intermediate base-metals production by 2015, according to a presentation posted on the company’s website.

Debt financing for El Pilar would be more attractive with copper prices around $3.80 a pound, McLeod said. The company won’t finance the project using equity at current valuations, he said.

Copper futures for March delivery fell 1.1 percent to $3.538 a pound at 4:41 p.m. on the Comex in New York.

Private Placement

The El Pilar project in northern Mexico may produce an average of 73 million pounds of copper a year, according to a feasibility study published on Sept. 27. The mine may cost $245 million, Mercator said at the time.

The company said on Nov. 17 it had arranged a $20 million private placement. The funds will be used to prepare the project for construction when financing becomes available, McLeod said.

Mercator expects to produce 43 million pounds of copper and 7 million pounds of molybdenum this year at Mineral Park and will ramp up to 55 million pounds and 10 million pounds, respectively, in 2012, McLeod said. The company also owns the El Creston molybdenum and copper project in Mexico, and will complete a feasibility study in the first quarter of 2012.

Mercator fell 1.1 percent to C$1.81 in Toronto. The shares have declined 54 percent this year after increasing 60 percent in 2010.