Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Teck Resources (TSX: TECK.A/TECK.B, NYSE: TECK) have closed their previously announced joint venture to advance the San Nicolás copper-zinc project in Mexico.
Under the agreement, Agnico Eagle, through a wholly-owned Mexican subsidiary, will take a 50% stake in Minas de San Nicolás (MSN) for US$580 million. Teck and Agnico Eagle are now 50/50 JV partners at San Nicolás, which is located in Zacatecas state.
The mining companies — two of Canada’s biggest — teamed up last year at San Nicolás — one of Mexico’s largest undeveloped volcanic-hosted massive sulphide deposits and among the largest globally.
According to a 2021 estimate prepared by Teck, San Nicolas contains proven and probable reserves of 105.2 million tonnes grading 1.12% copper, 1.48% zinc, 0.4 gram gold per tonne and 22 grams silver — or more than 2% copper equivalent.
Teck completed a prefeasibility study in March 2021 on San Nicolas, which contemplated an open-pit, truck and shovel, processing and flotation operation. The study estimated first production in 2026, a mine life of 15 years, and during the first five years, annual production of 63,000 tonnes of copper and 147,000 tonnes of zinc in concentrate.
Average life of mine head grades, the study found, would come in at 1.13% copper and 1.49% zinc, and average C1 operating costs were pegged at US16¢ per lb. copper during the first five years of production and US44¢ per lb. over the life of mine, net of byproduct credits.
Development capital costs were forecast to run to about US$842 million with a 2.6-year payback period. At US$3.50 per lb. copper and US$1.15 per lb. zinc, the study estimated an after-tax internal rate of return of 33%.
The companies are planning to submit an environmental impact assessment and permit application for San Nicolás in the first half of 2023 and are targeting completion of a feasibility study in early 2024.
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