Nevada Copper looks at smaller-scale high-grade option for Pumpkin Hollow

Nevada Copper (NCU-T) has updated a March 2008 preliminary economic assessment on its Pumpkin Hollow copper project in Nevada, incorporating a high grade case that gives the company more development options.

The data in the latest study will be used in a prefeasibility study to be completed in mid 2010.

Under the base case scenario the 7,500-ton-per-day project would include a small high grade starter pit during the first three years of the total 14 year mine life. A contractor would perform the open pit mining.

In total, Nevada Copper would mine 34 million tons grading an average of 1.88% copper, selling a nearly 1.1 billion lbs. of copper in that time.

Cash costs would average US$1.06 per lb. of copper. The study looked at copper prices of US$2 per lb., US$2.50 per lb. and US$3 per lb., for which all had capital costs of US$192 million.

Under the US$2.50 per lb. copper scenario, the internal rate of return is 44% and the net present value is US$498 million at an 8% discount. The payback period for capital costs would be 2.4 years.

Under the alternative case scenario, the mine life is two years shorter at 12 years and production would gradually increase from 2,500 tons per day to 7,500 tons per day by the start of year four.

The company would mine 26 million tons grading 1.95% copper, selling a total of 853 million lbs. of copper.

The March 2008 study looked at 60,000-ton-per-day open pit and underground operation with an NPV of US$552 million at US$1.75 per lb. copper to US$1.7 billion at US$3 per lb. copper using an 8% discount rate. Capital costs for this much larger scale project were estimated at US$780 million.