TORONTO (miningweekly.com) – Vancouver-based base metals miner First Quantum Minerals on Tuesday announced that it planned to lift the copper production capacity at its flagship Cobre Panama project, in Panama, by 20%; however, it would cost more to build and the start-up would be delayed.

First Quantum, in March last year, succeeded with its C$5.1-billion hostile takeover bid for rival Inmet Mining, which gave it control of the massive Cobre Panama project.

Since then, the company's main focus had been to critically review and stabilise all construction activities and focus on the critical elements of the project’s development, construction and contracting plan, and implementation of practical site infrastructure.

The revised project would have installed capacity of about 70-million tonnes a year for the first ten years - an increase of about 17% when compared with the original Inmet plan - and an expansion of up to 100-million tonnes a year was expected beyond the first decade of operations.

On the basis of the current May 2010 National Instrument 43-101-compliant resource estimate of 3.27-billion tonnes in the measured and indicated resources categories, inclusive of reserves, the project would produce an average of about 320 000 t/y of copper over the expected 34-year life-of-mine (LoM) – an increase of about 20% over the Inmet plan.

The project’s copper grade was expected to average at 0.5% for the first ten years and 0.37% during the remaining mine life.

Further, the average LoM by-product output was expected to comprise 100 000 oz/y of gold; 1.8-million ounces of silver; and 3 500 t/y of molybdenum.

The average LoM strip ratio was expected to be 0.7:1.

First Quantum noted, however, that the expected $6.4-billion capital outlay for the project would be $200 000 more than the Inmet estimate, and that production would start about one year later in 2017, than what was first anticipated.

The company pointed out that it had transformed the Cobre Panama project from being developed on an outsourced approach, to a complete in-house, self-perform arrangement where third-party engineers and contractors were now used only for identified specific tasks, and worked within the company's preferred project execution model.

FINANCING

The miner said it had signed a $2.5-billion five-year term loan and revolving facility with its banks, mainly to bankroll its capital programme.

First Quantum also announced a bond swap proposal to Inmet note holders, offering to exchange $2-billion in notes issued by Inmet for two groups of $1.14-billion new First Quantum bonds that would mature in 2020 and 2021.    

In November last year, First Quantum strongly disputed claims by some note holders that it had violated the terms of indentures and defaulted on certain debt it took on after acquiring Inmet earlier in the year.

First Quantum owns mines and projects in Africa, Australia, South America and Europe, and with pro forma revenues forecast to be more than of $3.5-billion and a strategic plan to produce more than 1.3-million tons a year of copper by 2018, was poised to become the largest widely held, pure-play copper producer and one of the top five copper producers in the world.

First Quantum’s TSX-listed shares climbed by as much as C$0.61 apiece on Tuesday, trading at C$20.45 a share.