Metallica Resources has released details
of a technical report issued by consulting
firm Pincock Allen & Holt (PAH) following
a review conducted by PAH of the
feasibility study provided to Metallica by
Xstrata Copper for the El Morro coppergold
project in Chile. The El Morro project
is operated under a joint venture
agreement between Xstrata Copper
(70%) and Metallica (30%). The main
points of the review included:
• An initial capital investment estimate
considered accurate to within 15% of
$2.52 billion, including a contingency
for price escalation of 13%.
• The project economic model, which is
based on the capital cost and operating
parameters set forth in the feasibility
study and recreated and reviewed by
PAH, shows a positive after tax internal
rate of return of 14.7% and a Net
Present Value of $1.09 billion when
discounted at a rate of 8% and using
long-term prices of $2.80/lb for copper
and $625/oz for gold. Project payback
occurs at 4.7 years.
• Operating costs are estimated at
$10.55/mt of ore and a mine-site cash
cost of $0.76/lb copper, after gold
credits and production taxes at a longterm
gold price of $625/oz. The operating
costs are considered to be accurate
to within 15%.
• Average annual metal production during
the first five years has been projected
to be 203,000 mt/y of copper
and 302,000 oz/y of gold. The average
annual LOM production over the currently
estimated 14-year mine life is
projected to be 172,000 mt/y copper
and 313,000 oz/y gold.
• The feasibility study was based on the
La Fortuna copper-gold deposit which
contains proven and probable ore
reserves totaling 450 million mt averaging
0.58% copper and 0.46 g/t gold
with an average waste-to-ore ratio of
3.65:1. Average metallurgical recoveries
are estimated at 88.5% for copper
and 69% for gold.
• The ore reserves are contained within a
larger economically constrained “mineral
resource pit” consisting of measured
and indicated resources totaling
558 million mt averaging 0.55% copper
and 0.49 g/t gold, and inferred
resources totaling 62 million mt averaging
0.34% copper and 0.18 g/t gold
at a 0.3% copper-equivalent cut-off
and based on metals prices of $1.25/lb
copper and $500/oz gold.
Xstrata has also reported to Metallica
that additional resources occurring outside
the mineral resource pit include
indicated resources totaling 52 million
mt averaging 0.57% copper and 0.61 g/t
gold, and inferred resources totaling 234
million mt averaging 0.51% copper and
0.48 g/t gold at a cut-off 0.3% copper
equivalent. These additional resources
were not included in the review by PAH,
according to Metallica, because they are
not integral to the feasibility study ore
reserve.
Based on its review of the feasibility
study, PAH recommended that the joint
venture partners initiate detail engineering
design work to optimize the project in
areas such as water use, metallurgical
processing, tailings disposal and possibly
others. The report also recommended rerunning
the pit optimization to develop a
mine plan based on the most recent
resource estimate completed in October
2007. The current resource estimate
used for the feasibility study was completed
in July 2007.
As featured in Womp 08 Vol 5 - www.womp-int.com
