Louvicourt mine capital cost set at $326.4 million

The capital cost of building a 5,000-tonnes-per-day copper-zinc mine on the Louvicourt Twp. property held 55% by Aur Resources (TSE) and 45% by Societe Miniere Louvem (TSE) will be $326.4 million, according to a feasibility study.

With initial mining scheduled to begin in late 1993, the joint venture will also require $15.9 million to finance production costs before the Val d’Or, Que., operation yields its first cash flow.

But as Aur and Louvem are building the biggest mining project undertaken in eastern Canada for some time, Aur President James Gill does not expect any problem obtaining his company’s share of project financing.

Prepared by Fluor Daniel Wright, the study is based on diluted minable reserves of 22.8 million tonnes grading 4.01% copper, 1.99% zinc, 0.039 oz. gold and 0.99 oz. silver per tonne.

It expects the project to yield over $2 billion in revenues (net of smelter charges) over a 14-year mine life and to provide employment for more than 522 people in the depressed Val d’Or region.

“Clearly it is good enough to be project-financable,” Gill told The Northern Miner. “The only question now is what percentage of financing will come from the banks,” he said.

The feasibility data are scheduled to be approved by a project management committee consisting of representatives of Aur and Louvem’s major shareholder Noranda (TSE) before being sent to prospective lenders. With a 52% interest in Louvem, Noranda has rights to the junior’s share of concentrates plus first refusal on at least half of Aur’s concentrates.

As a result, it is reasonably certain that all of the concentrates produced at Louvicourt will be refined at Noranda’s Horne smelter in Rouyn-Noranda, Que., about 90 km from the mine site, said Aur Vice-President Howard Stockford.

While mining operations are expected to begin in late 1993, the costly shaft sinking and underground development won’t commence until financing is secured. But Gill and Stockford are clearly excited as they enter the next stage of the Louvicourt development scenario.

A product of the flow-through financing era, the Louvicourt deposit is expected to produce 1.8-billion lb. copper, 671-million lb. zinc, 512,600 oz. gold and 13.9-million oz. silver during its lifespan.

Estimated operating costs over 14 years are $948 million, and the joint venture should be able to recover preproduction capital costs within three years, according to the feasibility study.

The weighted averaged grade is estimated at 5.4% copper, 2.05% zinc, 0.039 oz. gold and 0.99 oz. per tonne.

While the spot copper price was US$1.07 on the day the feasibility study was released, the project is expected to break even on a cash operating basis at a copper price of 51 US cents per lb.

As investors anticipated the feasibility results, shares of both Aur and Louvem rallied sharply to gain 80 cents and 60 cents within a 48-hour period. St. Genevieve Resources (TSE), which owns 21% of Louvem, added 10 cents to its share price.

Gill said Vancouver affiliates Teck (TSE) and Cominco (TSE), which hold a combined 21.2% interest in Aur, have not indicated that they intend to do anything other than remain minority shareholders. “As far as we know we are running the property and it is our job to build the mine and run it.” Salable concentrates will be comprised of 26% copper and 53% zinc, according to metallurgical studies carried out by the Centre de Recherches Minerales in Quebec City.

If a standard flotation circuit is used, the joint venture should achieve recoveries of 95.6% for copper and 79.5% for zinc.