Equinox feasibility positive (October 20, 2005)

A revised feasibility study on the Lumwana copper project in northwestern Zambia shows a 20-million-tonne-per-year open pit mine could be economic.

Project operator Equinox Minerals (EQN-T, EQN-A) commissioned the study, by consulting firm GRD Minproc, to update an earlier feasibility study produced in 2003. The new study reflects Equinox’s decision to sell concentrate to a smelter, rather than build a roasting and leaching plant to produce cathode-grade copper.

The study bases its conclusions on mining a reserve of 212 million tonnes grading 0.82% copper, in two pits: Lumwana, with 95 million tonnes at 0.97% copper, and Chimiwungo, with 117 million tonnes at 0.69%. Another 5.9 million tonnes of oxide material, grading 0.83%, is included in the reserve, but not brought into the mining schedule. The pits would have a 17-year life.

Average life-of-mine production would be 150,000 tonnes per year, but higher-grade zones are scheduled for early mining, yielding an average 188,000 tonnes annually over the first five years. Based on a copper price of US$1 per lb. (US$2,200 per tonne), the operation would pay back its capital cost in 4.6 years.

Ore would go to a conventional flotation plant, and Equinox has already made some offtake deals with smelters.

Opeating costs are estimated at US63 per lb. (US$1,390 per tonne) in the first five years of production, and an average US70 per lb. (US$1,540 per tonne) over the life of the mine.

The study puts the capital cost of the project at US$807, and its net present value, after tax, is US$68 million at an 8% discount rate. The internal rate of return on the project is 10.3%.