Coro moves ahead despite anti-acid law

VANCOUVER — Coro Mining (COP-T, CROJF-O) is not letting a law banning the use of sulphuric acid impede progress at its San Jorge copper-gold project, in Argentina.

The mid-sized porphyry deposit is in Mendoza state, where a law passed last year banned the use of certain toxic substances, including sulphuric acid, in metal-based activities. Though the ban makes heap leaching the oxide ore impossible, Coro is moving ahead with plans to mine and process the deposit’s enriched and primary sulphide ores.

A new technical report says the sulphide plan is feasible. Now Coro says it will complete an environmental assessment by the fall and then embark on prefeasibility studies.

San Jorge is a typical porphyry deposit with near-surface oxide mineralization and primary sulphide mineralization at depth. In between lies an enrichment zone; that ore could be processed by heap leach, like the oxides, or by flotation, like the sulphides.

In evaluating the float-only scenario, Coro included both primary and enriched material. In those categories, San Jorge hosts 152 million tonnes grading 0.48% copper and 0.2 gram gold, as well as 11 million inferred tonnes grading 0.38% copper and 0.16 gram gold.

The technical study for the float-only project predicted annual production averaging 90 million lbs. copper and 39,000 oz. gold in concentrates over a 16-year mine life. The open-pit mine would produce 10 million tonnes of ore per year to process via conventional crushing, grinding, flotation, thickening, and filtering.

The mine plan calls for processing of 157 million tonnes averaging 0.47% copper and 0.19 gram gold per tonne. The operating life-of-mine strip ratio is 1.7:1, peaking in the first year at 2.2. To remove the thin cover and the oxide ore requires prestripping 25 million tonnes, which raises the life-of-mine ratio to 1.87.

From the primary material, metallurgical testing shows recoveries of 90% for copper and 74% for gold. Enriched ore recoveries are slightly lower, at 81% for copper and 64% for gold. Primary ore produces a concentrate grading 26% copper; enriched ore results in a concentrate grading 32% copper.

Initial capital costs to develop the float-only project come in at US$277 million, including a US$14- million contingency and $8 million in working capital. Average cash costs are US91 per lb. copper, dropping to US69 per lb. copper when the gold credit is included.

Using a base-case copper price of US$1.65 per lb. gives the project a pretax net present value of US$291 million, using a 10% discount rate. The base-case internal rate of return comes in at 31.4%, allowing for payback in three years.

A total of 41 million tonnes of oxide material grading 0.48% copper would be stockpiled as waste over the life of the mine. Coro, of course, wants to process the oxide ore as well and has filed suit against the state government, charging that the legislation is unconstitutional. If the suit is successful or the law is otherwise changed, Coro is ready.

A separate technical report that evaluated the potential for a heap leach-only scenario included all of San Jorge’s oxide ore as well as roughly half of its enriched ore. As such the reports overlap slightly.

Nevertheless, a heap leach-only plan foresees production of 492 million lbs. copper cathode over a 10-year mine life from mining 48 million tonnes of ore grading 0.61% copper. Initial capital costs to develop the heap leach and solvent extraction-electrowinning plant come in at US$162 million. The project’s base-case pretax net present value is estimated at US$159 million with a 28% internal rate of return.

Sulphuric acid is in short supply in Chile and Argentina. After analyzing various power and acid supply options, Coro opted to incorporate a 330,000-tonne-per-year on-site sulphur-burning acid plant into its heap-leach mine plan. The plant adds US$36.6 million to the capital cost but is sized to provide essentially all of the operation’s projected power requirements, eliminating the need for a power line.

Moreover, the plant would produce some 200,000 tonnes of acid beyond Coro’s needs at San Jorge to be sold into the market at an estimated long-term price of US$90 per tonne. Those acid sales would bring in roughly US$20 million annually, reducing average cash operating costs from US90 per lb. copper to US55.

News of the positive float-only report boosted Coro’s share price slightly: it gained 4 to close at $1.49. The company has a 52-week trading range of 85-$2.25 and has 36.2 million shares issued.