Study gives Creston Moly project NPV of US$502.9 million

A new prefeasibility study for Creston Moly‘s (CMS-V) project of the same name in Sonora, Mexico, says a 40,000-tonne-per-day open pit operation could produce 20 million lbs. of molybdenum and 12 million lbs. of copper per year over 11 years.

The project has a pre-tax net present value of US$465 million with contract mining and a US$502.9 million NPV with owner mining, at an 8% discount rate in both cases.

The pre-tax internal rate of return is 28.2% with contract mining and 27.2% with owner mining.

Cash costs were put at US$6.57 per lb. moly equivalent with contract mining and US$5.74 per lb. with owner mining.

Capital costs using a contract miner were put at US$511.6 million and US$576.2 million with owner mining.

The base case study used a moly price of US$15 per lb. and a copper price of US$1.75 per lb. The company pointed out that as of January 2009, the three-year rolling average metals prices for moly and copper were US$28.67 per lb. and US$3.12 per lb., respectively while current prices are about US$9.10 per lb. and US$1.45 per lb.

The Creston deposit has proven and probable reserves of 146.7 million tonnes grading 0.077% moly totaling about 250 million lbs. moly and 0.049% copper for 158.8 million lbs. copper.

The waste to ore strip ratio for the pit would be 1.23 to 1 over the mine life. Over the 11 years, the mine would produce a total of 219 million lbs. of molybdenum and 129 million lbs. of copper. During the first five years, the molybdenum grade would be higher than average at 0.088%.

Creston Moly says there is potential to add to reserves, increasing the mine life, through exploration of the Main, Red Hill, Alejandra zones.

Creston Moly shares were up a penny today at 12¢ apiece on a trading volume of nearly 59,000 shares. The company has 121 million shares outstanding.