Feasibility Gives Thumbs-Up To Stingray’s El Pilar

Stingray Copper (SRY-T, SRYYF-O) has decided to develop its El Pilar oxide copper project in north-central Sonora, Mexico, as a low-cost, open-pit mine with a solvent extraction and electrowinning plant.

A recently released feasibility study indicates that the 100%- owned El Pilar deposit, about 15 km south of the U. S. border, could produce 35,000 tonnes of copper cathode or 77 million lbs. of copper per year. That rate can be reached during the first three years of the project.

El Pilar also lies 45 km northwest of the Cananea copper mine of Grupo Mexico (GMBXF-O, GMEXICOB- M), the largest porphyry copper deposit in Mexico and one of the largest in the world.

In a statement, Peter Mordaunt, Stingray’s chairman and chief executive, said oxide copper projects of El Pilar’s size are “quite rare” today. He also noted that while the financial landscape of the copper industry has “changed significantly” since work began at El Pilar, copper demand has remained strong.

El Pilar is expected to produce 956 million lbs. of LME Grade A copper cathode over the course of its 14-year mine life.

Copper mineralization remains open to the south.

At a capacity of 17 million tonnes per year, average copper cathode production is projected at 68.3 million lbs. per year.

The initial capital cost, plus or minus 15% for the base case, is estimated to be about US$209 million.

That includes a cogeneration acid/power plant and the use of a mining contractor. A copper price of US$2.25 per lb. was used for the feasibility study.

Before taxes, the study indicates El Pilar’s internal rate of return (IRR) will be about 33.6% and the project will have an estimated payback period of 2.8 years.

After taxes, the IRR drops to 25.3% and payback increases to 3.7 years.

The waste-to-ore stripping ratio over the mine life is estimated at 1.61:1.

At a 0.15% copper cutoff grade, proven and probable reserves total 229.7 million tonnes at 0.31% copper for 1.55 billion contained pounds.

Measured and indicated resources, exclusive of reserves, add 115.2 million tonnes at 0.24% copper, or 606 million contained pounds copper. Inferred resources add an extra 72.8 million tonnes at 0.24% copper, or 385 million contained pounds copper.

The resource exceeds the mining reserve scheduled for mining in the study and additional resources and reserves may be available at El Pilar subject to appropriate programs of drilling and confirmation.

The study estimates that copper recovery will be about 62.9% in the first year, including the preproduction period, 68.4% for the second year, around 60% for years three through 12, and 61.5% for years 13 and 14.

Stingray’s shares recently traded at 45¢ apiece in a 52-week trading range of 13-82¢; the company has 58.7 million shares outstanding.