Los Andes Copper on track to deliver Vizcachitas prefeasibility by year-end, says CEO

Los Andes Copper (TSXV: LA; US-OTCQX) is eager to restart drilling at the flagship Vizcachitas porphyry copper-molybdenum deposit in Chile while it works in parallel to publish a pre-feasibility study on the project before year-end.

“General engineering work, infrastructure planning, plant design and environmental considerations are all on track with the plan to complete the (prefeasibility) in the fourth quarter,” CEO Michael Jones told The Northern Miner.

“The successful drilling completed in 2022 has been incorporated into the resource model, and opportunities to increase the potential project mining rate are being assessed,” Jones said in an interview.

Jones says the company is currently mobilizing drill teams after a July environmental court decision reinstating the drilling permit with certain operational conditions, including a restricted drilling plan for the first 12 months.

He underlined that the exploration and PFS workstreams could progress independently of each other, given a March court resolution asking the company to suspend drilling in an order that deals with protecting the Andean cat, a threatened species. The court order related to the impact on the habitat of the vizcachas, a small rabbit that is part of the food chain for the Andean cat, the company said at the time.

“Our drilling plan will allow the company to pursue its original program of illuminating and defining extensions of the mineralized body, which remains open,” Jones said. “Drilling is planned to resume soon to expand the resources beyond those currently considered in the (prefeasibility).” Alluding to the deposit’s growth potential, he added that large-scale intercepts of up to 1,000 metres of mineralization announced this year are still open in the deposit model.

Meanwhile, key engineering work being completed as part of the prefeasibility study include identifying and resolving primary bottlenecks in the mine plan, including increasing production rates via enhanced open-pit development and improving crushing and grinding of ore.

“The PEA has a 45-year life of mine, so accelerating production would benefit the project,” said Jones, referring to a preliminary economic study completed in 2019.

Los Andes also examines ways to enhance operations by applying new technologies. The company is considering incorporating high-pressure grinding rolls and dry stacking of tailings into the mine design process, for example, which would reduce water and energy use considerably. In addition, it recently entered a letter of intent for the procurement of desalinated water with plans to add to regional water infrastructure, benefitting the project and the community.

Situated about 120 km north of Santiago, the Minera Vizcachitas project hosts measured and indicated resources of 1.3 billion tonnes grading 0.396% copper, 141.4 parts per million (ppm) molybdenum, and 1.05 ppm silver for contained metal of 11.2 billion lb. copper, 400 million lb. molybdenum and 43.4 million oz. silver.

Inferred resources add 788.2 million tonnes grading 0.33% copper, 127 ppm molybdenum, 0.88 ppm silver for contained metal of 5.8 billion lb. copper, 221 million lb. molybdenum and 22.3 million oz. silver.

The 2019 preliminary economic assessment outlining a long-life open pit mine, forecasted an average head grade of 0.53% copper-equivalent over the first five years of operation.

At an 8% discount rate, the project would generate a post-tax net present value of US$2.7 billion and an internal rate of return of 26.7% using copper prices of US$3.50 per pound.

The study, which evaluated three cases with daily mill throughputs of 55,000 tonnes grading 0.52% copper,125 ppm molybdenum and 1.5 grams silver per tonne; 110,000 tonnes grading 0.47% copper, 129 ppm molybdenum and 1.3 grams silver per tonne; and 200,000 tonnes grading 0.44% copper, 113 ppm molybdenum and 1.2 grams per tonne silver, envisaged a capital cost of about $1.3 billion to $2.8 billion.

The feasibility study will seek to expand on these scenarios.

The Vizcachitas property includes a porphyry copper-molybdenum deposit that offers potential for a low strip, open pit operation in an area of low elevation with excellent infrastructure, including water and power in central Chile. The Vizcachitas deposit occurs in the same metallogenic belt as the large copper-molybdenum porphyries Rio Blanco-Los Bronces, Los Pelambres-El Pachon and El Teniente.

The company’s project lands are subject to net smelter return royalties of 2% on surface production and 1% on any underground production.

Exploration upside

According to Los Andes, the Vizcachitas porphyry system is associated with a complex of hydrothermal breccias and porphyries within Miocene volcanic rocks. Five different drilling campaigns have been undertaken on the property from 1993 to date.

A total of 165 diamond drill holes have been drilled, totalling 52,256 metres. Jones explains that the drilling carried out in 2015 to 2017 confirmed the new geological models and showed the importance of the early diorite porphyry and hydrothermal breccias in controlling the higher-grade mineralization of the deposit.

The new geological model also defined a near-surface higher-grade supergene enriched mineralization outlining an area of 400 by 400 metres where all the drill holes have returned average supergene grades greater than 0.5% copper.

Among the highlight results from this year’s completed drilling program was hole CMV-12B, which intersected 861.2 metres of 0.39% copper-equivalent from 29.5 metres depth, including 330.7 metres of 0.63% copper-equivalent from 560 metres depth. Another highlight intercept in hole CM-001B hit 1,177 metres of 0.5% copper-equivalent from 180 metres depth.

“The drilling program results, with the one-kilometre intercepts of copper, clearly point to Vizcachitas becoming the next significant deposit in line for development in a district which hosts three of the largest porphyry copper mines in the world. We are only just now starting to see its full potential,” said Jones, adding the company is still looking for the centre of mineralization on the property.

“Large-scale, advanced copper projects like Vizcachitas are rare and are expected to be in high demand as the copper market heads towards an expected significant supply deficit in the years ahead,” he said. “Los Andes Copper’s 100% ownership of Vizcachitas with no copper offtake entanglements is also attractive to larger copper producers in the region.”

However, the executive laments that despite the existing resource, the near-term value catalysts, project economics and the remaining resource upside, the company is trading at only about an x1 NAV multiple.

“It is incomprehensible how copper juniors are not getting the love they deserve. By Goldman Sachs’ estimates, there is a five to eight-million-tonne per year copper supply gap opening up from 2025 onwards – in the case of a 150,000-tonne per year project like Vizcachitas, that’s 85 new mines just to keep up with baseline demand. All these new mines are realistically never going to happen,” says Jones.

The company’s Toronto-quoted equity has come off a March high at $17.73 but is still up more than 55% over the 12-month timeframe, giving it a market cap of $368.2 million.