Rapu Rapu closer to production

With an environmental permit in hand, Australian-based Lafayette Mining is proceeding with development of the Rapu Rapu massive-sulphide mine in the Philippines.

Situated in Albay province, on the island of Luzon, the project consists of two past-producing deposits, Ungay Malobago and Hixbar. Only the former is to be mined.

Reserves are pegged at 4.9 million tonnes grading 2.71 grams gold and 30.39 grams silver per tonne, plus 1.38% copper and 2.43% zinc. Plans call for open-pit mining over six years, which would yield 293,000 oz. gold, 3.6 million oz. silver, 60,900 tonnes copper and 89,200 tonnes zinc.

Ore will be floated on site to produce separate copper and zinc concentrates for smelting elsewhere. Also, a carbon-in-leach circuit will be used to produce dor bars from the soluble-portion of the zinc tailings and a gossanous cap overlying the main deposit.

Capital costs are pegged at US$37.8 million, including closure and rehabilitation expenses, while cash operating costs are estimated to be US$121.3 million.

The project is expected to generate US$222.9 million in net revenue and US$101.6 million in net cash flow. This translates into a net present value of US$28.6 million at a 10% discount and a 30% internal rate of return. The cash flow, NPV and IRR estimates exclude interest payments.

Mining is deemed economic at prices of US$275 per oz. for gold; US$5.10 per oz. for silver; US92 per lb. for copper; and US51 per lb. for zinc.

Although the Hixbar deposit is excluded from the study, Lafayette says it could be mined at a later date. The deposit, which extends underground from the western end of pit shell, hosts 1.1 million tonnes grading 2.7 grams gold, 25 grams silver, 1.3% copper and 2% zinc.

However, before the Hixbar resource can be upgraded to reserve status, geotechnical and development studies are required. A conceptual study has already reviewed the deposit’s metallurgical characteristics, delineation and marketing requirements.

Mine construction should begin in the fourth quarter, following independent reviews by bankers and mining contractors. Development is expected to last 14 months.

TVI Pacific (TVI-T) holds a 2.5% net smelter return royalty in Rapu Rapu, as well as 3.3 million unlisted options, exercisable at A20 apiece, in Lafayette. Lafayette holds a right-of-first-refusal on the royalty.