TORONTO (miningweekly.com) – TSX-V-listed project developer Panoro Minerals on Wednesday reported “significantly improved” economic metrics for its Cotabambas porphyry copper/gold/silver project, 48 km south-west of the city of Cuzco, in the Apurimac region in southern Peru.
Incorporating an optimised mine plan and processing cutoff grade strategy, along with associated improvements to waste rock and tailings management, the Vancouver-based company reported that at the updated base-case prices of copper at $3/lb, gold at $1 250/oz and silver at $18.50/oz, it had managed to improve the project’s after-tax net present value (NPV), at a 7% discount, to $683.9-million, more than double that of the $379.4-million reported in the previous preliminary economic assessment (PEA) published in April.
The updated PEA, prepared by Amec Foster Wheeler Americas and Moose Mountain Technical Services, also calculated an improved internal rate of return of 16.7%, compared with the previous estimate of 11.8%.
The improved project economics were achieved mainly with mine planning improvements and optimisation of the cutoff grade strategy. There were no changes to the resource classification from the April PEA, nor was there a change to the proposed processing throughput of 80 000 t/d.
Despite the initial capital costs increasing from $1.38-billion to $1.53-billion, mainly owing to an increased mine fleet size, the capital payback period decreased from 4.8 years to 3.6 years.
"We are pleased to have updated the PEA for the Cotabambas project, realising more of the project's potential, which was not fully captured in the April PEA. The optimised mine plan, together with the resulting changes and improvements to the mine waste-rock and tailings management plan have resulted in strongly improved project economics,” president and CEO Luquman Shaheen advised.
The new mine plan would see Cotabambas produce, on average, 155.1-million pounds of payable copper, up from the previous 143.3-million pounds, 95 100 oz of gold, up from 88 000 oz, and one-billion ounces of silver, up from 967.2-million.
The average direct cash costs decreased to $1.22/lb of copper, from the previous estimate of $1.26/lb, net of by-product credits, placing the project among the lowest-cost quartile of global copper producers.
Located within the productive Andahuaylas-Yauri copper/gold belt of southern Peru, Cotabambas counted as one of several significant copper deposits, including Glencore Xstrata’s Las Bambas and Antapaccay projects, Hudbay Minerals’ Constancia mine, which had recently achieved commercial production and First Quantum Minerals’ Haquira deposit.
At a cutoff grade of 0.2% copper, Cotabambas currently held an indicated resource of 117.1-million tonnes, grading 0.42% copper, 0.23 g/t gold, 2.74 g/t silver and 0.001% molybdenum. In the inferred category 605.3-million tonnes of resources, grading 0.31% copper, 0.17 g/t gold, 2.33 g/t silver and 0.002% molybdenum, had been identified.
CHANGE OF PLANS
The main changes of the optimised mine plan comprised a speedier ramp-up of the process plant to design capacity, processing higher-grade ore early in the mine life, stockpiling low-grade ore for processing near the end of the mine life and eliminating low-margin mineralisation from the processing plan, resulting in higher head grades in the early part of mine life, higher average life-of-mine grades, reduced mineral processing tonnes and a reduced mine life.
Panoro advised that the updated PEA mine plan had 10% less mill feed tonnes at a 7% higher copper grade, a 6% higher gold grade and a 4% higher silver grade than the April PEA. There was, however, 10% more waste tonnes in the updated PEA than in the previous PEA.
The latest PEA contemplated a modified waste-rock storage plan, whereby the previously planned crusher, conveyor, tunnel and stacker would be replaced by truck haulage along surface roads, resulting in reduced risk of operational disruptions from downtime of either the crusher, conveyor or stacker.
An altered tailings management strategy had also resulted in reduced sustaining capital for tailings dam construction near the end of the mine life, owing to the reduction in mineral resources included in the mine plan.
Shaheen noted that there were more project enhancement opportunities that would be investigated at the prefeasibility stage of the project. “…let's not forget the significant upside to the project in the excellent remaining exploration potential. The current resource is open along strike and at depth and there are a number of clustered porphyry and skarn zones in the vicinity of the current resource that have not yet been drilled. The scale of the growth potential for the Cotabambas project remains impressive,” he said.