Updated study for Adrian’s Petaquilla

Kilborn Engineering Pacific has updated its 1994 prefeasibility study for the Petaquilla and Botija deposits being advanced by Adrian Resources (TSE) in Panama.

Recent work on the property has led to an increase in minable reserves for the advanced copper deposits, as well as boosting the geologic resource at the nearby Molejon deposit to more than 2 million oz. gold.

Based on a 0.2% copper-equivalent cutoff, minable reserves at Petaquilla and Botija have risen by 17% over previous estimates. They now stand at 579 million tonnes grading 0.52% copper and 0.014% molybdenum, plus 0.12 grams gold and 1.32 grams silver per tonne.

Based on a milling rate of 60,000 tonnes per day, the mine is expected to last over 26 years.

Adrian President Chet Idziszek says the revised study takes into account survey data and 10 additional infill drill holes, and also considers the economic effects of moly as a byproduct.

The infill holes enabled Adrian to upgrade inferred reserves to the measured and indicated category and, consequently, reduced the stripping ratio over the life of the mine to 1-to-1 from 1.3-to-1. An additional 236 million tonnes of inferred reserves remain within the confines of the open pit, and any further infill drilling will likely extend mine life.

The base-case guidelines of the study (US$1 per lb. copper, US$375 per oz. gold and a daily milling rate of 60,000 tonnes) have not changed, with the exception of the inclusion of moly at US$6 per lb.

When the original study was undertaken, moly was selling for US$3.40 per lb. Since that time, worldwide demand has overtaken supply, boosting the price to US$15-16.50.

The net present value for the initial 26.4-year mine life is estimated at US$259 million at a discount rate of 10%, an internal rate of return of 18.4%, and a payback period of 4.2 years. An average on-site operating cash cost is projected at 35 cents per lb. copper while the initial capital cost is estimated at US$457 million.

A comparison study, employing a 0.5% copper-equivalent cutoff, estimates diluted minable reserves as being 320 million tonnes grading 0.64% copper, 0.021% moly and 0.12 grams gold for a mine life of 14.7 years. The net present value, using a 10% discount, would be US$282 million, with an internal rate of return of 22.5% and a payback period of 3.3 years. Teck (TSE) is preparing a bankable feasibility study on the Petaquilla copper deposits and will, in the process, earn half of Adrian’s 52% stake. Metall Mining (TSE) holds the remainder.

Teck is currently funding Adrian’s share of exploration expenses at Petaquilla. Since mid-January, diamond drillers have completed more than 3,500 metres at Molejon, Brazo, Vega and Lata. Teck is accelerating development of the Molejon gold deposit, as the shallow-lying deposit is considered amenable to open-pit mining methods with low stripping ratios. Molejon consists of three subparallel, gently dipping, quartz-vein breccia zones within a sequence of volcanics and porphyry intrusives. Infill and stepout drilling has increased the geologic resources to more than 2 million oz. contained gold from 1.25 million oz. Selected results include 22.6 metres of 5.17 grams gold plus 3.6 grams silver for hole 95-130; 39 metres of 3.52 grams gold plus 5.6 grams silver for 95-132; and 31.5 metres of 1.63 grams gold plus 4.3 grams silver for 95-145.

At Lata, three drill holes tested a large, gold, geochemical anomaly. Hole 95-136 intersected 1.5 metres of 1.2 grams gold plus 0.2 grams silver, and 1.5 metres of 4.02 grams gold plus 0.2 grams silver. Hole 95-138 returned 3 metres of 17.59 grams gold plus 97.7 grams silver, while hole 95-140 returned 15.3 metres of 1.06 grams gold. Additional drilling is planned. The total geologic resource at Petaquilla for seven of the deposits is estimated at 1.9 billion tonnes containing about 20 billion lb. of copper, 8.2 million oz. gold and 568 million lb. of moly. In addition, reconnaissance exploration continues to test new areas.