Cerro Casale moves closer to development

A final feasibility study by Placer Dome (PDG-T) indicates that the Cerro Casale porphyry gold-copper deposit in Chile can be developed economically as a large-scale, low-grade open-pit mine.

The deposit is part of the Aldebaran property, 250 km southeast of Copiapo.

The study envisions an open-pit mine with a stripping ratio of 2.7-to-1 and minable proven and probable reserves of 1.03 billion tonnes grading 0.69 gram gold per tonne and 0.26% copper, equivalent to 23 million oz. gold and 6 billion lbs. copper. The calculation is based on a cutoff grade of 0.4 gram gold, a gold price of US$350 per oz. and a copper price of US95 per lb.

At a daily processing rate of 150,000-170,000 tonnes, the mine would produce an estimated 975,000 oz. gold and 287 million lbs. copper annually over an 18-year mine life.

Assuming a copper credit of US95, cash operating costs are projected at US$98 per oz. gold. Total costs, including life-of-mine capital, are pegged at US$203 per oz., whereas projected capital costs are a lofty US$1.43 billion.

Gold and copper recoveries are expected to be 76.3% and 87.1%, respectively.

Based on these figures, the internal rate-of-return after a 15% tax rate is projected to be 10.7%. The net present value, using a 5% discount rate, would be about US$915 million, and the project payback is estimated at 7.1 years.

The study recommends standard floatation, with the concentrate piped to the coast and shipped to a smelter for final processing.

The Aldebaran property comprises 450 sq. km in the Maricunga region of the Andes Mountains, 150 km inland from the Pacific coast. Besides Cerro Casale, Aldebaran hosts two near-surface gold zones. Resource estimates at the Cerro Roman zone are pegged at 104.7 million tonnes grading 0.12% copper and 0.69 gram gold, whereas the Eva zone hosts a resource of 51.8 million tonnes grading 0.7 gram gold.

The property is owned 51-49 by Arizona Star Resource (AZS-V) and Bema Gold (BGO-T). Placer can earn a 51% interest by arranging US$1.3 billion in mine financing and assuming responsibility for construction. Once the earn-in is complete, Bema will hold 24% and Arizona Star, 25%.