The scoping study for Norsemont Minings (NOM-T) Constancia copper project in southern Peru is in, and the results have the company preparing for a busy 2008.
The results exceeded our expectations, says Patrick Evans, Norsemonts chief executive. Evans says with the strong results the company now expects to get feasibility underway and completed next year alongside its environmental impact study.
The Vancouver-based company is targeting a 2012 start-up date for an open pit mine at the site.
The study was done by SRK Consulting and it considered using a standard milling and froth flotation plant for producing high grade copper and molybdenite concentrates.
It estimated a 30,000 tonne per day operation to have a 20 year mine life, a $404 million net present value and a 21.4% IRR (with an 8% discount rate and a 25% contingency) while a 55,000 tonne per day operation comes with 12 year mine life, an NPV of $530 million and an IRR of 25.3% using the same discount rate and contingency.
The 55,000 tonnes per day operation is estimated to turn out roughly 112,218 tonnes per year of copper over the first five years, with a life of mine annual average production of 90,411 tonnes. It would cost US$739.9 million to build.
The 30,000 tonne per day operation would produce 72,814 tonnes per year of copper in the first five years, with a life of mine average of 53,598 tonnes. It would cost US$605.6 million to build
Cash operating costs net of credits are estimated at 74 per lb over the 20-year project life for the 30,000 tonne operation and 67 per lb over the 12-year project life for the 55,000 operation.
While Evans says the company is open to both options as well as a third option which would see a 30,000 tonne per day operation build that was expandable to 55,000 tonnes — he tied the likely choice to results from drilling.
The final decision will be based on how successful we are at increasing our global resources, Evans says. Were at 3.6 billion lbs. Rio Tinto estimated 6 billion lbs.the larger the resource the greater the potential to go for the higher mining rate.
To boost resources the company is infill drilling on the Constancia and San Jose zones. The drilling is part of a 42,000 metre program that should wrap up by the end of the year. More exploration drilling is planned for 2008.
Sitting up at over 4,000 metres in the Andes, roughly 600 km southeast of Lima, Constancia has an indicated resource of 70 million tonnes copper and an inferred resource of 250 million tonnes copper.
The deposit lies in the same belt as Xstratas Antapaccay, Tintaya and Las Bambas projects.
In Toronto on Nov. 5 Norsemont shares were up over 4 or 14 to $3.40 on 286.000 shares traded.
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