LATIN AMERICA — Cambior concludes feasibility study at El Pachn $900-million copper-molybdenum project on road to development

A feasibility study of the Pachn copper-molybdenum project in Argentina has given the green light to manager Cambior (CBJ-T) and its equal partner, the Argentine firm Compania Minera San Jos.

The project lies in the northwestern province of San Juan, just 2 km from the border with Chile and 180 km north of Santiago. The 1,855-ha project area comprises 31 mining concessions, with surface rights over 34,000 ha.

The porphyry deposit, on its own, covers a 2-sq.-km area of andesite, tuff, diorite, siliceous and tourmaline breccia, as well as quartz-biotite-feldspar porphyry.

Copper and molybdenum, in the form of chalcopyrite and molybdenite, occur mainly in the primary zone within the andesite, diorite, siliceous breccias and, to a lesser degree, the tuff.

Proven and probable reserves, using a cutoff grade of 0.4% copper, remain at 880 million tonnes grading 0.62% copper (for 12 billion lb. in situ copper) and 0.015% moly, plus 0.02 gram gold and 2.41 grams silver per tonne.

This estimate is based on samples from a 37,000-metre drill program, which consisted of 207 diamond-drill, percussion and reverse-circulation holes. The portion of the resource estimate classified as “possible” occurs mostly at depth, where the deposit remains open.

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Open-pit methods

The deposit is minable by open-pit methods, with a waste-to-ore stripping ratio of 0.86-to-1. Pre-stripping will be limited to 35 million tonnes, and the amount of material to be moved will not exceed 90 million tonnes annually.

During the first five years of production, the deposit will be mined at higher grades of 0.81% copper, yielding 940,000 tonnes of copper concentrate annually, or 250,000 tonnes (2.9 million lb.) of copper annually, with cash costs of 28 per lb. copper.

>From the sixth to the 15th year of the mine life, annual production is expected to be 740,000 tonnes of copper concentrate. From this, 200,000 tonnes of copper will be derived on a yearly basis. For the remaining 10 years of life, these figures will fall to 590,000 and 160,000 tonnes, respectively.

The grinding circuit will employ two parallel grinding lines, each of which will consist of one semi-autogenous mill and two ball mills. Daily throughput is projected at 100,000 tonnes.

Metallurgical tests indicate that copper recoveries from andesite, diorite and breccias will be 94%, 96% and 83%, respectively. The overall mill recovery will be 92%, with the copper concentrate grade pegged at 28%.

Molybdenum recovery within copper-moly concentrates is expected to vary from 60% to 70%. A subsequent recovery of 80% is projected for the molybdenum circuit, resulting in a concentrate grading 48% moly.

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Transportation

A copper-concentrate slurry will be sent 164 km via pipeline to a filter plant at Los Vilos on the Chilean coast, while the moly concentrate will be de-watered on-site and trucked to Los Vilos.

On-site infrastructure to be built includes a roadway, utilities, varous building complexes and an airstrip. The administrative centre will be based in the city of San Juan, Argentina.

A tailings impoundment area will be situated 8 km east of the plant in the adjoining Mondaca Valley. A new access road from Chile, along with a 2.2-km tunnel, will be driven through the mountain ridge dividing Chile and Argentina. The road will join existing roads near Cuncumen, Chile, and provide a continuous route from El Pachn to Los Vilos.

Electrical power will be supplied from either Chile or Argentina with a peak power demand estimated at 100 MW.

The Argentine environmental baseline and impact studies were approved this past July; similar studies for the Chilean infrastructure are to be presented soon.

Construction at El Pachn is scheduled to take three and a half years, with up to 15 months required to complete the road and tunnel access before any major work, such as mill construction, can begin.

Capital costs are estimated at $810 million (in fourth-quarter 1996 dollars), of which $710 million would be incurred in Argentina and $100 million in Chile. The total investment required, including working capital, is estimated at $900 million. Total investment (in dollars of the day and escalated at 2% per year) is estimated at $970 million.

Financially, the project will have an after-tax internal rate of return of 15% with a project payback within four years, based on 100% equity and constant 1996 dollars.

The study was based on a daily throughput of 100,000 tonnes with price assumptions of $1 per lb. for copper and $4 per lb. for moly. Treatment charges were derived from a base of $90 per tonne and 9 per lb. plus appropriate transportation and shipping charges.

The study further states that the project’s economics could be improved by associating with any proposed Chilean smelter projects, by boosting reserves through a deep drilling program, or by sharing infrastructure with the Los Pelambres copper mine, situated 10 km away in Chile.

Though Cambior intends to maintain its manager status and 50% equity position in the project, its partner, Minera San Jos, is looking for an equity partner either to fund or buy its share of the project, possibly before the end of the year.

Should the financing be arranged quickly, Cambior anticipates that construction of the access road and tunnel could begin as early as the second half of 1998. Mine and infrastructure construction would then be scheduled to last from 1999 to 2001, with commercial production expected to begin in late 2002.

One of the key developments that made way for the project was the January 1997 protocol agreement between Argentina and Chile that eased border restrictions on employees, vehicles, equipment and materials moving between the two countries.