Augusta Updates Rosemont Feasibility

An updated bankable feasibility study on the Rosemont copper-molybdenum project in Pima Cty., Ariz., has found that the proposed mine would have an after-tax net present value of 5%, or US$1.28 billion, at a copper price of US$1.85 per lb., Augusta Resource (AZC-T, AZC-X) reports.

The study replaces a 2007 feasibility study on Augusta’s 100%-owned Rosemont project and confirms that it is an “economically robust” open-pit copper-molybdenum mine with “low development risk,” the Vancouver-based company said in a press release.

Using long-term metal prices of US$1.85 per lb. of copper, US$15 per lb. molybdenum and US$12 per oz. silver, the project would generate an internal rate of return (IRR) of 17.8% and would have a payback period of five years on an after-tax basis.

“We are confident the project economics are robust at a wide range of metal prices,” Gil Clausen, Augusta’s president and chief executive, said in a prepared statement. “Even applying the average spot metal prices witnessed in December 2008 of US$1.36 per lb. copper, US$11 per lb. molybdenum and US$10.79 per oz. silver, the project has an after-tax IRR of 7.7%.”

Based on current mineral reserves, if Rosemont reaches production, it would have a lifespan of about 21 years.

Augusta forecasts cathode production would start in the fourth quarter of 2011 and concentrate production in the first quarter of 2012.

Rosemont will be a conventional, modern hard-rock open-pit operation. The open-pit mine, concentrator and leaching facilities will include a nominal concentrator production capacity of 75,000 tons per day.

The mine is expected to produce about 221 million lbs. of copper each year, 4.7 million lbs. of molybdenum and 2.4 million oz. silver, plus about 15,000 oz. gold as a byproduct credit.

The study calculated the total capital of new construction (including direct and indirect costs) at US$897.2 million. These costs will cover the construction of the 75,000 ton-per-day open-pit mine and sulphide copper concentrator plant with a heap-leach SX-EW plant for the treatment of the oxide copper mineral reserve.

The average life-of-mine operating costs are pegged at US83¢ per ton mined. These costs include drilling, blasting, loading, hauling, road and dump maintenance and general mining. Mill process operating costs average US$3.34 per ton of mill ore, which includes crushing and conveying, grinding and classification, flotation and regrind, concentrate thickening, filtration and dewatering, tailings disposal and mill ancillary services.

Rosemont has measured and indicated resources of 103.4 million tons of oxide material grading 0.2% copper; 36.9 million tons of mixed material at 0.53% copper and 0.005% molybdenum; and 524 million tons of sulphide material at 0.5% copper and 0.015% moly.

In the inferred category, Rosemont holds a further 30.4 million tons of oxide resource at 0.24% copper, 14.5 million mixed tons at 0.42% copper and 161 million tons of sulphide resource at 0.45% copper and 0.008% moly.

Augusta has received a 20-year groundwater withdrawal permit, but still needs to get five other major approvals before it can start construction, including a reclamation permit, state aquifer protection permit, air emissions permit, and an Army Corps of Engineers Section 404 permit.

In Toronto, Augusta recently traded at about 69¢ per share. The company, which has 88.7 million shares outstanding, has a 52-week range of 43¢-$6.96 per share.