As foreshadowed in the news of December 30 on this website, the first issue of International Mining Project News for 2016 is a bumper newsletter of over 70 pages. It details the news from over the holiday season about 24 prefeasibility studies, 14 feasibility studies, more than 30 projects going into the development stage, nine new operations going into production, 10 operations that are now expanding, 12 mergers and acquisitions and many people who are moving jobs within the industry.
One of the major news items is NGEx Resources reporting the results of a PEA that evaluates the development of two of the company’s large copper/gold/silver deposits, Los Helados (Chile) and Josemaría (Argentina), together as one project. The integrated project will be called Project Constellation, and the results, NGEx says, “indicate positive economics and position the project amongst the largest and most exciting development projects in South America.
Project Constellation economic results:
| Pre-tax NPV (8%) & IRR | $3.65 billion NPV 17.9% IRR | ||
| After-tax NPV (8%) & IRR | $2.09 billion NPV 14.5% IRR | ||
| Payback period (undiscounted, after-tax cash flow) | 4.6 Years | ||
| Metals prices assumed | $3.00/lb Cu $1,275/oz Au $20.00/oz Ag | ||
| Initial capital expenditures | $3.08 billion | ||
| LOM sustaining capital expenditures | $4.36 billion | ||
| LOM C-1 cash costs (net of byproduct credits) | $1.05/lb Cu payable | ||
| Nominal mill capacity | 150,000 t/d | ||
| Mine life | 48 years | ||
| Average annual metal production (rounded) | Life of mine | First five years | Peak |
| 150,000 t Cu 180,000 oz Au 1,180,000 oz Ag | 185,000 t Cu 345,000 oz Au 1,310,000 oz Ag | 215,000 t Cu 415,000 oz Au 1,600,000 oz Ag | |
| LOM Average Process Recovery | 88.3% Cu 72.7% Au 61.4% Ag | ||
* All figures reported are in 2015 US dollars and on a 100% Project and 100% equity basis valuation.
Project Constellation contemplates sequential production from an open pit mine at Josemaría followed by a block cave, underground mine at Los Helados. The two deposits are located approximately 10 km apart, and material from both deposits would be processed at a centralised facility. Los Helados is part of a joint venture in which the company holds 60% and Pan Pacific Copper Co holds 40%. Josemaría is part of a joint venture in which the company holds 60% and Japan Oil, Gas, and Metals National Corp (JOGMEC) owns 40%. The PEA was completed by Amec Foster Wheeler, the mineral resource estimates were completed by Behre Dolbear, and the environmental studies were completed by MB Asesoria Ambiental and BGC Engineering.
Including pre-stripping, Project Constellation would be in operation for 50 years. Initial development would target the highest grade portion of the Josemaría deposit, which is a near surface zone of supergene enriched mineralisation. As the higher grade material at Josemaría is depleted, production will transition to the high grade core of the Los Helados deposit. Compared to either deposit when considered as a stand-alone operation, Project Constellation’s shared facilities help improve capital efficiency, reduce overall environmental impacts, and dramatically improve project economics.
CEO Wojtek Wodzicki: “We are very pleased with the results of this study which indicates robust economics and highlights the potential to develop our discoveries into one of the largest producers of copper, gold, and silver in South America. The completion of the PEA is a major milestone but it is by no means the end of our efforts to fully realise the value that we see in this remarkable district. The exploration potential around the proposed processing plant is excellent and the ‘hub and spoke’ design of the Project provides the flexibility to connect any new discoveries to the Project Constellation infrastructure.”
PEA highlights:
- Large, robust resource, with most of the mine plan derived from Indicated Mineral Resources (86%)
- A sequential mine plan that takes advantage of the early, higher grade material accessible at Josemaría followed by the higher grade core at Los Helados; many optimisation opportunities exist
- Development capital costs for the Los Helados block cave would be paid for through operating cash flows from the Josemaría open pit, dramatically reducing the initial capital required
- Estimated 48-year mine life with potential for extension and/or throughput expansion (only 37% of the total Josemaría mineral resource is included in the PEA mine plan)
- Life of mine production totals 7.1 Mt of copper (15.7 billion lb), 8.5 Moz of gold, and 55.6 Moz of silver
- Forecast lowest quartile C-1 costs per pound of copper net of byproducts
- Excellent metallurgy yielding a clean, 29% copper concentrate, with high precious metals content
- Clear opportunities to improve project economics by realising additional potential synergies with nearby deposits.
Project opportunities include optimising the integrated mine plan and considering opportunities for both expansion and mine life extension as significant resources remain outside the current PEA production plan. There is also potential to recover gold from the oxide cap at Josemaría. NGEx aims to increase metallurgical recoveries with further test work and optimisation and also to delineate more or higher grade feed material for the process plant through continued exploration on the company’s extensive land package.
NGEx notes that “the new government in Argentina is revising the tax code to encourage foreign investment. The 10% export tax has been lifted for gold, agricultural commodities, and industrial goods. If it is also lifted for copper concentrate export, there would be a significant positive impact on Project Constellation.”