Taseko hopes for Prosperity

Vancouver — Its Gibraltar mine is already a fixture in south-central B.C., and now Taseko Mines (TKO-T, TGB-X) has moved another B.C. prospect one step closer to a production decision.

A feasibility study for Taseko’s 100%-owned Prosperity gold-copper project came back with good news: a 70,000-tonne-per-day mine and concentrator facility would produce 108 million lbs. copper and 247,000 oz. gold each year over a 20-year mine life with healthy economics.

The study gave Prosperity a $260-million pretax net present value at a 7.5% discount rate and a 12% internal rate of return. Total preproduction capital costs are estimated at $800 million.

Prosperity hosts 480 million tonnes of proven and probable reserves grading 0.43 gram gold per tonne and 0.22% copper, using a $4-per-tonne net smelter return cutoff.

After a year of prestripping, the deposit would see 145,000 tonnes mined per day at a strip ratio of 1.1. A declining net smelter return applied to the mill feed means lower-grade ore would be stockpiled for the final three years of the mine plan. Including processing of lower-grade ore reduces the life-of-mine strip ratio slightly, to 0.8.

Hydro power will be supplied via a new, 124-km-long high-voltage transmission line from Dog Creek. The mine would support 500 full-time jobs for its 20-year lifespan, and during construction would employ up to 900 people. The economic and social benefits to the Cariboo-Chilcotin, a region struggling with the fallout from the pine beetle infestation, would be significant.

Before a production decision could be made, Taseko still needs to submit Prosperity’s environmental impact assessment. Perhaps the biggest obstacle in that regard is the company’s plan to contain tailings in a creek valley leading to a local fish-bearing lake, similar to a proposal for Northgate Minerals’ (NGX-T, NXG-X) Kemess North project that a joint federal-provincial environmental review panel recently came out against.

Taseko acquired Prosperity in 1969. Through the 1970s and 1980s, exploration drilling continued under option agreements with several companies. In 1991, Hunter Dickinson acquired Taseko and in the following decade, the company outlined a bulk-tonnage porphyry gold-copper mineral resource. Prosperity reached the feasibility study stage in the late 1990s, but low copper and gold prices prompted the company to put the project on hold. Work started again in 2005.

The deposit is oval, roughly 1.5 km long, 800 metres wide, and 880 metres deep. The principal sulphide minerals are pyrite and chalcopyrite, uniformly distributed as disseminations, fracture fillings, and sub-vertical veinlets. Native gold occurs as inclusions in copper-bearing minerals and pyrite.

In other Taseko news, the company’s 2007 drill program at Gibraltar paid off in September, with a 128-million-tonne increase in the mine’s reserves. Total reserves at Gibraltar now stand at 384 million tonnes at 0.31% copper and 0.009% molybdenum. In addition, Gibraltar hosts 530 million tonnes of measured and indicated resources grading 0.31% copper and 0.007% molybdenum.

Taseko is in the midst of a major 2-phase expansion at Gibraltar, due to finish by the end of 2008. Post-expansion, milling will be maintained at 55,000 tons per day, up from 46,000 tons. The expansion includes 10 new, 160-cubic-metre flotation cells; a new semi-autogenous grinding (SAG) mill; modernized and increased regrind capacity; a 2-stage pumping system; and the addition of a pebble crusher to the SAG mill circuit.