A feasibility study on the El Morro copper-gold project, in Mexico, puts average annual production at 195,000 tonnes copper and 354,000 oz. gold over the first five years of a 15-year mine life, say joint-venture partners Metallica Resources (MR-T, MRB-X) and Xstrata (XSRAF-O, XTA-L) subsidiary Xstrata Copper.
The companies will finish sifting through a mountain of information from the study, contained in 75 large binders, before they decide what to do next.
The study recommends the companies complete an environmental impact assessment and detailed infrastructure engineering, as well as order long-lead items during 2008.
Capital costs for the project are projected at US$2.5 billion, which includes an allowance for prices to rise 13%, while total life-of-mine capital expenses, including sustaining capital, are estimated at US$2.8 billion.
The project’s returns would be positive as long as the copper price is above US$1.92 per lb. and gold is more than US$500 per oz.
After gold credits and at a long-term gold price of US$500 per oz., operating costs are estimated at US$10.56 per tonne of ore with a mine site cash cost of US74 per lb. copper. The cost estimates are considered accurate to within 15%.
The study was based on 487 million tonnes of ore grading 0.56% copper and 0.44 gram gold per tonne with a waste-to-ore ratio of 3.4:1. Metallurgical recoveries are estimated at 88% for copper and 69% for gold.
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