TORONTO (miningweekly.com) – Miner and project developer McEwen Mining on Monday published the results of an updated preliminary economic assessment (PEA) for its Los Azules copper project, in San Juan province, Argentina, demonstrating that it has the potential to become one of the largest, lowest-cost copper mines in the world.
The study, which updated a December 2010 PEA, had found that when using a copper price of $3/lb, a gold price of $1 300/oz and a discount rate of 8%, the project had an expected after-tax net present value of $1.7-billion and an after-tax internal rate of return of 14.3%.
The project, comprising a mine and a 120 000 t/d process plant, would cost about $3.9-billion to construct, and would produce about 563-million pounds a year of copper in the first five years, placing it in 2012's top 3% of copper mines in the world, the company said.
Los Azules would produce an average of about 377-million pounds of copper over its 35-year mine life.
The project is one of the world's largest, highest grade, undeveloped copper/porphyry deposits not owned by a major base-metals company, and is located in western San Juan, within a belt of porphyry copper deposits that straddle the Chile/Argentina border.
This belt contains some of the world's largest copper deposits, including Codelco's El Teniente and Andina mines, Anglo American's Los Bronces mine, Antofagasta's Los Pelambres mine and Xstrata's El Pachon project, among others.
The PEA placed its cash operating costs during the first five years at an average of $0.87/lb of copper, net of gold by-product, placing it in the bottom 14% in the world during 2012. Cash operating costs over the entire mine life were expected to average $1.08/lb of copper, net of gold by-product.
The capital payback, on a pretax basis, had been estimated at 3.8 years at the PEA’s assumed metals prices.
Compared with the previous PEA, there were two significant improvements to the project, including the resource size and the production methodology.
The indicated resources had increased by 184% and the inferred resources had increased by 55%, which was slightly offset by a decreases in grade of 14% in the indicated category and 12% in the inferred category. Overall, this had resulted in a 37% increase in mine life and 44% increase in total copper production.
The project’s National Instrument 43-101-compliant indicated resource stood at 5.4-billion pounds of copper and 800 000 oz of gold, and the inferred resource stood at 14.3-billion pounds of copper and 2.6-million ounces of gold.
According to the current PEA, Los Azules would produce copper cathode at the site, whereas the 2010 PEA contemplated producing copper concentrate and transporting it through a pipeline through Chile. The company said the main advantages of producing copper cathode at the site were that it would eliminate the pipeline through Chile, which was a substantial risk for the project, as well as an overall increase in recovered metal for both copper and gold.
Cathode production would also result in reduced export taxes (5% payable on cathode versus 10% on concentrate) and the removal of treatment and refining charges from the smelting process. The mine would produce a copper cathode via a pressure oxidative leach process, in addition to heap leaching the lower-grade mineralised material.
Chief owner Rob McEwen in July told Mining Weekly Online it had engaged BMO Capital Markets to sell the high-grade project.
However, no buyer willing to pay a fair price for the project had been forthcoming.
McEwen said that if the company could sell the property for the right price, all the company’s capital expenditure requirements for its other projects would be accounted for.
However, Los Azules’ $3.9-billion construction cost, the low current copper price and the capital control measures in Argentina were question marks hanging over the project’s head.