Norsemont looks at 2012 startup for Constancia

The scoping study for Norsemont Mining’s (NOM-T, NOMFF-O) Constancia copper project in southern Peru is in, and the results have the company preparing for a busy 2008.

“The results exceeded our expectations,” says Patrick Evans, Norsemont’s chief executive.

With the strong results, Evans says the company now expects to get a feasibility under way and completed next year alongside its environmental impact study.

The Vancouver-based company is targeting a 2012 startup date for an open-pit mine at the site.

The scoping study, by SRK Consulting, considered using a standard milling and froth flotation plant to produce high-grade copper and molybdenite concentrates.

It examined two scenarios, one that would see a smaller volume of tonnage processed and a longer mine life, and another that would see larger volume over a shorter life. The study estimated a 30,000-tonne-per-day operation to have a 20-year mine life, a US$404-million net present value (NPV) and a 21.4% internal rate of return (IRR) (with an 8% discount rate and a 25% contingency) while a 55,000-tonne-per-day operation would have a 12-year mine life, an NPV of US$530 million and an IRR of 25.3% using the same discount rate and contingency.

The 30,000-tonne-per-day operation would produce 72,810 tonnes per year of copper in the first five years, with a life-of-mine average of 53,600 tonnes. It would cost US$605.6 million to build.

The 55,000-tonne-per-day operation would turn out roughly 112,220 tonnes copper per year over the first five years, with a life-of-mine annual average production of 90,410 tonnes. It would cost US$739.9 million to build.

Cash operating costs, net of credits, are estimated at US74 per lb. under the first scenario over 20 years and US67 per lb. under the second scenario over 12 years.

While Evans says the company is open to both options — as well as a third option which would see a 30,000-tonne-per-day operation built that could be expanded to handle 55,000 tonnes — he tied the likely choice to results from drilling.

“The final decision will be based on how successful we are at increasing our global resources,” Evans says, adding that the current resource is 3.6 billion lbs. copper. “Rio Tinto estimated six billion pounds. . . The larger the resource, the greater the potential to go for the higher mining rate.”

To boost resources, the company is infill drilling on the Constancia and San Jose zones. The drilling is part of a 42,000-metre program that should wrap up by the end of the year. More exploration drilling is planned for 2008.

Sitting up at over 4,000 metres in the Andes, roughly 600 km southeast of Lima, Constancia has an indicated resource of 70 million tonnes grading 0.53% copper at a 0.2% copper cutoff, and an inferred resource of 250 million tonnes grading 0.51% copper.

The deposit lies in the same belt as Xstrata’s (xsraf-o, xta-l) Antapaccay, Tintaya and Las Bambas projects.

In Toronto on the news, Norsemont shares were up more than 4% to $3.40 on trading volume of 286,000 shares.