Inmet Mining, Petaquilla Copper and
Teck Cominco announced the results of
an interim report on the Front End
Engineering and Design (FEED) study
being conducted by AMEC Americas
(AMEC) on the Petaquilla copper project
in Panama. The interim report estimates
that the capital cost required to develop
the Petaquilla project would be US$3.5
billion (including a contingency of $515
million but not including working capital
and escalation). The capital cost estimate
includes approximately $500 million
for the construction of an oil-fired
power plant and approximately $280 million
for port facilities. Cash costs, including
operating and realization costs and
net of by-product credits, in years one to
10 of the project are estimated to average
$0.85/lb of copper produced. The
study is based on the mine plan developed
in 1998, which contemplates a 23-
year mine life. The project includes a
concentrator capable of processing
120,000 mt/d of ore. Construction is
expected to take approximately 44
months from issuance of construction
permits. Permitting would follow the submission
of a social and environmental
impact assessment, expected to be completed
in the fourth quarter of 2008.
Capital costs for the project have
increased substantially over previously
published estimates both as a result of
scope changes, including enhancements
in erosion control, water management
and other environmental protection
measures, as well as increases in equipment
and construction costs that have
been affecting projects worldwide.
Despite the increase in capital costs
required to develop Petaquilla, the mining
companies believe that the project
still has the potential to be a world-class
operation.
Work is continuing on the FEED study.
A project review team is currently studying
opportunities to reduce the capital
costs. Several possible opportunities
have already been identified in the area
of the grinding circuit, power supply and port infrastructure. The project review
team will evaluate these opportunities
over the next six weeks and, where appropriate,
incorporate these changes into
the capital cost estimate.
The parties have agreed that
Petaquilla Copper will have the right to
present proposals for the construction of
the power plant and port facilities for the
project, and associated infrastructure,
including the road from the concession to
the Caribbean coast. To the extent that
Petaquilla Copper’s proposals are technically,
economically and commercially
equivalent to or more attractive than the
base case contemplated by the FEED
program, Petaquilla Copper’s proposals
will be incorporated in the development
of the project, and Petaquilla Copper will
receive a management fee for preparing
the proposals.
Inmet holds a 48% equity interest in
Minera Petaquilla, S.A., the Panamanian
company that holds the Petaquilla concession,
while Petaquilla Copper currently
holds a 52% equity interest. Teck
Cominco has the right to acquire a 26%
equity interest in Minera Petaquilla by
committing, prior to March 31, 2008, to
participate in work plans and budgets
leading to commercial production, and
by committing to fund 52% of development
costs for the project.
As featured in Womp 08 Vol 3 - www.womp-int.com