Constellation Copper releases scoping study on San Javier

Results from Constellation Copper‘s (CCU-T, CCUDF-O) scoping study show its San Javier oxide copper project in Mexico can be a significant copper cathode producer.

The San Javier deposit is about a two-hour drive east of the city of Hermosillo in the state of Sonora, and will be mined primarily from an open pit.

The study estimates the project will require initial capital of US$238.9 million, which includes all mining equipment and US$39.2 million in contingency.

Using a discount rate of 8%, San Javier has a net present value of US$79.8 million, an internal rate of return of 15.7%, a payback of 3.9 years and an undiscounted cumulative net cash flow of US$227.9 million, the study finds.

The project should produce an estimated 30,000 tonnes per day of ore over a base case mine life of about 9 years. During the first five years, the average copper production rate will be 49.3 million lbs. annually at an average operating cost of US$1.14 per lb. copper.

Construction and preproduction will take about 18 months.

The resource base used in the preliminary economic assessment was updated from an earlier estimate published in a technical report in June.

The updated resource base incorporates data from about 89 core holes, totaling 12,083 metres, that were drilled this year but which were not included in the earlier resource estimate.

The scoping study used a base case resource of 89.5 million tonnes grading 0.34% copper at a strip ratio of 0.83:1. About 37% of the resource’s estimated 671 million lbs. copper is classified as indicated and the remainder as inferred.

None of the current mineral resources could be classified as mineral reserves and do not have demonstrated economic viability, the company said in a press release.

The positive findings were welcome news to the company, which has recently suffered setbacks at its troubled Lisbon Valley copper project in southeastern Utah. In October the company announced it would shut down the mine in early 2008 in order to convert it to a leach-only operation.

Results of the San Javier scoping study sent Constellation Copper’s shares on the Toronto Stock Exchange up 2.5, or 35.7%, to close at 9.5 apiece.