Already destined to become the world’s third-largest zinc and seventh-largest copper mine, the Antamina deposit in Peru now holds the distinction of being the recipient of the largest financing ever for a greenfield mining project.
Compania Minera Antamina, a Peruvian subsidiary held jointly by
“This is a major milestone,” said Rio Algom president Patrick James at a company presentation in Toronto. “Since March of last year, when we released the feasibility study, we have maintained that Antamina is a quality project and that quality projects get financed.”
Two separate banking syndicates will provide US$640 million of the total loan, with the remainder covered by a group of import-export agencies. The partners will contribute, on a pro rata basis, to the US$1-billion equity component.
To help cover its share, Rio recently raised $160 million in a deal with a Canadian bank. The 5-year revolving financing is secured against accounts receivable from the major’s metals distribution business and will be assessed monthly, with the value expected to fluctuate between $150 million and $180 million.
“Our share of financing for Antamina is unquestionably in place,” said James. “And we continue to have financial flexibility for unforeseen events.”
In a related event, Mitsubishi of Japan has signed a definitive agreement with the Antamina partners to acquire a 10% equity stake in their subsidiary. The deal, which is subject to the closing of the financing and other conditions, would reduce Rio’s and Noranda’s share to 33.75% each, leaving Teck with 22.5%.
“Mitsubishi brings added strength to the ownership group,” stated Teck president Norman Keevil in a joint press release. “It also secures the participation of [the Bank of Tokyo-Mitsubishi and Fuji Bank] . . . and facilitates the involvement of Mitsubishi Materials and other Japanese smelters.”
Starting in 2002, Antamina will begin churning out an average of 600 million lbs. copper and 360 million lbs. zinc, plus 5.7 million lbs. molybdenum and 6.2 million oz. silver over each of the next 20 years. The Japanese smelting pool is expected to purchase about 20% of the copper and zinc concentrates.
Life-of-mine cash costs are projected at an average of US35 cents per lb. copper (net of byproduct credits).
Proven and probable reserves stand at 494 million tonnes grading 1.3% copper, 1% zinc and 0.03% molybdenum, plus 12 grams silver per tonne. However, mineralization continues at depth, putting overall resources at 900 million tonnes, which James said is sufficient for up to another 30 years of production.
Current efforts are focused on engineering, prestripping, road construction and excavation work, all of which are advancing as planned.
Meanwhile, Rio has increased by one-third the size of its wholly owned Spence copper deposit in Chile. In-pit resources now stand at 400 million tonnes grading 1% copper, divided among three separate zones: an upper oxide layer, hosting 50 million tonnes grading 1.4% copper; an enriched sulphide layer, hosting 200 million tonnes grading 1.3% copper; and an underlying primary sulphide layer, hosting 150 million tonnes grading 0.6% copper.
The increase stems from the addition of a flotation circuit to the flow sheet. Previously, only solvent extraction-electrowinning (SX-EW) had been envisioned.
Annual production is now projected at 500 million lbs. copper, or 67% higher than original projections. About 70,000 tonnes of ore would be mined daily at an average stripping ratio of 2.3-to-1, of which 60,000 tonnes would be ground in a semi-autogenous mill and then passed through two flotation circuits. The oxides will be loaded on to pads for leaching and subsequent processing through an SX-EW circuit.
Mill recoveries are anticipated at 90%, whereas recoveries from heap leaching are expected to average 80%. This would yield, on an annual basis, 410 million lbs. copper-in-concentrate and 90 million lbs. copper-in-cathode.
James reiterated his company’s plan to debt-finance the project but added that capital costs have increased to US$1 billion with the use of the dual metallurgical technique. Cash-cost projections have risen as well, to US55 cents per lb. copper.
“Though our numbers will no doubt change somewhat as feasibility advances, I think it’s clear that Spence is an attractive project,” said James. He added that the project would be developed by the same team that developed and subsequently expanded its nearby Cerro Colorado mine.
The feasibility study is scheduled for completion in mid-2000, with production possibly following four years later. Taken together, said James, the Antamina and Spence developments put the company on track to tripling its copper output to beyond 1.2 billion lbs. yearly while maintaining an overall objective of a 15% return on shareholder’s equity.
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