Milpo advances Cerro Lindo

Armed with a positive prefeasibility study, Compania Minera Milpo has advanced the Cerro Lindo project to the final feasibility stage. The zinc-lead-silver project, situated 175 km southeast of Lima, Peru, is poised to become a medium-sized, underground operation capable of treating up to 5,000 tonnes per day.

Since reactivating the project in 1999, Milpo has carried out two phases of exploration, including 23,852 metres of drilling in 86 holes and 4,240 metres of underground development. This work outlined a deposit 850 metres long, 430 metres wide and up to 200 metres thick, and which consists of three main bodies: OB-1, OB-2 and OB-5.

The minable resource is estimated at 25 million tonnes grading 5.07% zinc, 0.7% copper and 0.53% lead, plus 33.15 grams silver and 0.07 gram gold per tonne. About 9,000 metres will be drilled on a tighter, 35-metre spacing, along with a 240-metre drift, to gain a better understanding of the deposit’s geotechnical and geological characteristics.

Capital costs for a modern mine are estimated at US$87.5 million. Although the bulk of resources are within OB-2, mining will begin (at 3,000 tonnes per day) in OB-5 because that body has the highest grades and the least need for backfill. Mining of OB-2 will follow at a higher processing rate (and a lower cutoff grade), and end with the structurally complex OB-1 zone. A mine life of 16 years is envisioned.

Metallurgical tests have exceeded expectations, resulting in recoveries of 95% for zinc, 82.5% for copper, 77.4% for lead and 62% for silver. The concentrates are described as being of “exceptional quality,” with few penalty contaminants.

The mill circuit is expected to comprise a primary jaw crusher, feeding a single-stage semi-autogenous grinding mill, followed by a sequential copper, lead, zinc flotation flowsheet. All flotation circuits consist of rougher, cleaner and recleaner sections.

At full production of 5,000 tonnes per day, the mine is expected to yield 40,000 tonnes of copper concentrates (containing 28 million lbs. copper and 290,000 oz. silver), 140,00 tonnes of zinc concentrates (190 million lbs. zinc metal and 185,000 oz. silver), and 11,000 tonnes of lead concentrates (containing 15 million lbs. lead and 630,000 oz. silver).

Cerro Lindo sits at an elevation of 1,850 metres within the arid coastal range of Peru. A new gravel road from Chincha Alta provides access, and water will come from the Pucasaya and Topara Rivers. A 35-km powerline will be brought in from the national network. Environmental studies are in progress.

Milpo has producing mines and exploration projects in both Chile and Peru. During the quarter ended March 31, the company generated revenue of US$19.9 million and operating profits of US$2.7 million (offset by non-operating cost improvements). Consolidated cash flow from operations reached US$8.1 million, up 68% over the previous year, largely because of the strong performance of the Ivan copper mine in Chile.