TORONTO (miningweekly.com) – Tailings reprocessor Amerigo Resources on Friday reported below-target copper and sulphide output for the second quarter ended June, as the grades in both old and fresh tailings at the Minera Valle Central (MVC) operations, in Chile, were lower compared with the same period last year.

MVC, which recovers copper and molybdenum from the fresh tailings of Codelco-Chile’s El Teniente Division (DET by its Spanish initials) and also holds the rights for removing and processing the old tailings deposited in the Colihues dam by DET, reported output of 9.344-million pounds of copper, down 2.15% on last year.

Molybdenum output was 152 000 lb, down 13% from 176 000 lb in the same three months last year.

MVC currently processes 130 000 t/d of fresh tailings with a concentration of 0.12% total copper. MVC is also allowed to remove the old tailings that were deposited in the Colihues dam between 1977 and 1987, which have concentrations of around 0.23% copper.

"Copper production in the second quarter was below target owing to low grades for both fresh and old tailings. Sulphide content in the fresh tailings was also low and negatively impacted recovery. Colihues tonnage was on target during the quarter; however, low grades have persisted for longer than originally anticipated, as wet conditions in the Colihues extraction zone have limited access to better grades located in deeper zones,” Amerigo president and COO Rob Henderson said.

During the quarter, MVC continued to process lower-grade old tailings from the upper portion of the zone deposited by El Teniente during 2006/07, when repairs were being made to the tailings launder.

“We believe the grades of tailings processed will improve, but lower grades for Colihues are expected to persist to the end of the year,” Henderson said.

As a result, despite expecting improved production levels in the second half of the year, Amerigo revised its 2014 guidance downward from 45-million pounds of copper to 40-million pounds and molybdenum output, down from 800 000 lb to 500 000 lb.

Further, MVC had provided a termination notice to the Colihues mining subcontractor and started processing old tailings itself as of July 1, which, combined with other cost-reduction initiatives, were expected to result in decreased costs in the second half of the year. Amerigo maintained its full-year cash cost guidance of $2.15/lb to $2.25/lb of copper.

“The company continues to advance detailed engineering and has begun the major equipment procurement process for the Cauquenes expansion project. MVC has received final environmental approval for the project and is in the process of obtaining construction and other required permits.

“Discussions for the financing, concentrate sales, power supply and construction contracts for the expansion are ongoing and expected to be finalised in the near future,” Amerigo chairperson and CEO Dr Klaus Zeitler said.

Engineering for the Cauquenes expansion is progressing on schedule and MVC is in the process of prequalifying engineering, procurement and construction contractors to build the new facilities.