Arizona Star and Bema see heap-leach benefits at Cerro Casale

Vancouver – A recent project appraisal has partners Arizona Star Resource (AZS-V, AZS-X) and Bema Gold (BGO-T, BGO-X) examining potential for an initial heap-leach mine to kick-start and improve the economics of the Cerro Casale gold-copper project in the Maricunga district of Chile.

Arizona Star holds a 51% interest in the large low-grade project while Bema holds the balance. The companies intend to seek a potential partnership with a major mining company following the withdrawal of former partner Placer Dome, which was acquired earlier this year by Barrick Gold (ABX-T, ABX-N).

An independent engineering firm analyzed and updated operating concepts and cost estimates of a 2000 feasibility study by Placer that was updated by the major company in 2004. The recent appraisal confirmed the previously defined proven and probable reserves of 1.035 billion tonnes averaging 0.69 gram gold per tonne and 0.25% copper.

The base-case plan being considered calls for open-pit mining and initial heap-leaching of oxide ores at 75,000 tonnes per day and milling and flotation of mixed and sulphide material at 150,000 tonnes per day using two grinding lines (each consisting of one semi-autogenous mill and two ball mills).

The base-case scenario requires an initial capital investment of US$1.96 billion, which generates a pre-tax 100% equity internal rate of return of 13.1%, a net present value of US$1.35 billion, net of smelter credits, at a 5% discount rate. Cash operating costs are estimated at US$107 per oz. gold, net of copper and silver credits, based on a gold price of US$450 per oz. and US$1.50 per lb. copper.

Average gold production is estimated at 990,000 oz. gold per year and copper production of 294 million lbs per year. The mine life would be 17 years, with a payback period of 4.9 years.

Arizona Star notes that concept of heap-leaching oxides for one year prior to the start of milling sulphides “has significantly improved the project economics.” The proposed heap-leach phase would eliminate pre-stripping, provide early revenues, and create a second cash-flow stream once the mills are on line. It would also eliminate the need to blend the oxide ore with the sulphide mill feed, resulting in increased copper head grades and improved concentrate grades.

Sulphide concentrates would be shipped off-site for smelting and refining. The heap-leach phase and cyanide leaching of cleaner tails would allow dore bars to be produced on site.