TORONTO (miningweekly.com) – Canadian base producer miner Capstone Mining this week reported the results of an updated feasibility study on its Santo Domingo iron oxide/copper/gold project, in Chile, outlining potential for a low-cost operation.

The Vancouver-based company on Wednesday said two openpit mines would be developed at Santo Domingo, as well as a 65 000 t/d copper/iron concentrator.

In each of the first five years of production, output would average 248-million pounds of copper. Over the 18-year life of the project, output would average 128-million pounds of copper, 4.2-million tonnes of iron concentrate and 16 000 oz of gold a year.

Capstone expects C1 cash production costs to be $0.49/lb of payable copper (net of by-products iron and gold) in the first five years. On a coproduct basis, the total cash production costs will be $1.50/lb of copper and $43/t of magnetite iron in concentrate.

The project has an initial capital cost of $1.7-billion, in line with the project’s previous capital guidance.

Based on the revised project design, Capstone forecast an after-tax net present value of $797-million when using an 8% discount rate, an unlevered internal rate of return of 17.9%, with a payback period of 4.2 years.

“The positive feasibility study, combined with the initial regulatory response to the environmental-impact assessment that was filed in October 2013, gives us the confidence to advance the project to the next stage-gate decision point in early 2015,” Capstone president and CEO Darren Pylot said.

The feasibility study assumed power costs of $0.124/kWh based on rates currently being negotiated with potential power providers.

The deposit has National Instrument 43-101-compliant measured and indicated resources of 514-million tonnes grading 0.31% copper, 0.040 g/t gold and 25.8% iron. The inferred resource is 58.1-million tonnes at 0.20% copper, 0.026 g/t gold and 24.3% iron.

Contained within the resource estimate are proven and probable reserves of 391.7-million tonnes grading 0.30% copper, 0.04 g/t gold and 28.2% iron. Metal contained in the reserves includes 2.57-billion pounds of copper, 506 300 oz of gold and 75.1-million tonnes of iron in concentrate.

The project is 70% owned by Capstone and 30% owned by Korea Resources Corp.

Capstone on Friday traded 4.87% lower on the TSX at C$2.54 a share.