TORONTO (miningweekly.com) – Molybdenum-miner Thompson Creek has budgeted $298-million for capital expenditure (capex) in 2010, the bulk of which will go towards an expansion at its Endako operation in British Columbia, Canada.

The capex figure includes $209-million for the Endako project, as well as $89-million in sustaining capital spending across the company's operations.

The company also announced on Monday that the capital cost forecast for the Endako expansion has increased by around one-third, because of design changes.

Thompson Creek owns 75% of the Endako mine, and also operates the Thompson Creek mine, in Idaho.

After molybdenum prices fell sharply in late 2008 and continued to fall in early 2009, Thompson Creek took steps to conserve cash, including curtailing production levels and postponing nonessential spending.

As a result, the firm will be spending more on sustaining capital next year, compared with just $32-million forecast for 2009, said CEO Kevin Loughrey.

"We have increased our sustaining capital expenditures for our producing operations in 2010 as we proceed with maintenance and upgrades that had been postponed to conserve cash in 2009 and as we begin purchasing new equipment required for the extended 16-year mine life recently announced for the Thompson Creek mine," he said.

Almost one-half of the $89-million will go towards buying new trucks, shovels and drills, and the company also plans to ramp up spending on reclamation and environmental measures next year, said Loughrey.

The Endako mine expansion project includes the construction of a new, modern mill, which will increase the ore-processing capacity from the existing 31 000 t/d to 55 000 t/d.

The project was put on hold in December last year in response to deteriorating markets, but Thompson Creek said in August that it would restart work on the expansion.

The company used the delay to improve the project plan, and the changes are expected to boost efficiency and reliability while also lowering costs, Loughrey said.

However, the total capital cost of the project has increased to C$498-million (including a C$60-million contingency)

Changes include an enhanced and more flexible pebble crusher circuit to ensure a finer grind and an enhanced automation system - both of which will contribute to the improved recovery of molybdenum from the ore.

All processing equipment except for the roaster will now also be located in a larger new mill building, rather than using the existing mill building as initially planned.

“The old mill will be mothballed once the new mill is fully operational and available in the event of possible further expansion,” Loughrey said.

Thompson Creek's board has approved the new cost estimate and the company is seeking approval from its 25% joint-venture partner, Sojitz Corporation.

About $81-million had already been spent on the project by October 31, and around $279-million, of which $209-million in Thompson Creek's share, will be spent in 2010.

The balance of $99-million is budgeted for 2011 and commercial production of the molybdenum concentrate from the new mill is expected late in the second half of 2011.

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