PBX scopes Copaquire’s potential

Vancouver – A scoping study for the Copaquire copper-molybdenum project in Chile shows the project support a just-profitable mine as is but suggests that owner International PBX Ventures (PBX-V) investigate how the new-found rhenium component of the deposit might improve the project’s economics.

An estimate completed earlier this year boosted the copper and molybdenum count at Copaquire and for the first time approximated the amount of rhenium contained in the deposit. Indicated resources currently stand at 184.6 million tonnes grading 0.05% molybdenum, 0.089% copper, and 118 ppb (0.0000118%) rhenium. Inferred resources add 114.8 million tonnes averaging 0.051% moly, 0.096% copper, and 75 ppb rhenium.

The study assessed the prospects for an open-pit mine at Copaquire churning out 36,000 tonnes of ore daily. Ore would be treated in a conventional manner, with crushing and grinding followed by two flotation circuits. Copper recovery is expected to average 85% while global molybdenum recovery should come in near 70%. Thickened copper concentrate would be trucked to a local port or smelter; dried molybdenum concentrate would be packed into drums for transportation to a refinery.

The work determined that the mine would produce 785 million lbs. copper and 166 million lbs. molybdenum over a 24-year mine life. Operating costs would average US$7.15 per tonne.

The kicker is that the capital cost to develop the operation was estimated at US$774.4 million. The estimate includes a 20% contingency fund, which amounts to US$129 million.

Once built, the operation’s economics would depend on the prices for copper and molybdenum. If those prices sit at $2 per lb. copper and US$11.50 per lb. moly, net cash flow totals US$69 million and the project carries a net present value (NPV) of negative US$256 million, using a 5% discount rate. But using a copper price of US$2.80 and a molybdenum price of US$14 per lb., cash flow rises to US$886.7 million and NPV turns positive, coming in at US$118.7 million. And if metal prices hold steady at US$3 per lb. copper and US$20 pre lb. moly, cash flow hits US$1.8 billion and NPV hits US$505 million.

The study’s authors made several suggestions as to how PBX might lower Copaquire’s development costs or improve its operational economics. Based on those recommendations, PBX outlined three initiatives for the coming months.

First, PBX says its drilling efforts at Copaquire have focused almost entirely on the Cerro Moly zone, which constitutes only a quarter of the Sulfato copper-moly porphyry system. As such the company is planning an infill drilling program for the Sulfato South zone, which is immediately adjacent to Cerro Moly. Earlier drill results from Sulfato South indicate the area might hold higher-grade mineralization.

Second, PBX has sent more than 1,700 drill samples back to the assay lab to be re-analyzed for rhenium. Metallurgical testwork will assess potential recovery levels and the results will be included in an updated scoping study.

Third, the company says it has initiated studies to significantly reduce the initial capital investment required. One aspect of those studies is the investigation of alternative processing methods. PBX is looking into hydrometallurgical technology, which produces a more refined end product such as molybdenum trioxide instead of molybdenum concentrate and copper sulphate or cement instead of copper concentrate. Hydrometallurgical processing can also produce both ammonium perrhenate, which is the most common form in which rhenium is traded, and metallic rhenium.

The company also says it looking for potential synergies between Copaquire and producing mines in the immediate vicinity. Copaquire is in the Andean Cordiera of northern Chile, 20 km west of the Collahuasi copper mine, which is owned by Xstrata (XSRAF-O, XTA-L), Anglo American (AAL-L, AAUKY-Q), and a Japanese consortium, and 8 km west of Teck Resources‘ (TCK.B-T, TCK-N) large Quebrada Blanca copper operation.

As of mid-August PBX had $1.5 million in the bank. On news of the scoping study for Copaquire the company’s share price lost half a penny to close at 7¢. PBX has a 52-week trading range of 3¢ to 10.5¢ and has 77 million shares outstanding.