An independent feasibility study calls for a more productive second phase than planned at the proposed Tambo Grande open-pit mine in Peru, reports
The study, authored by AMEC & Services, concludes that 190 million lbs. copper and 90 million lbs. zinc can be produced annually, or 25% more than forecast in the prefeasibility report. Production of those metals is still scheduled to begin in the third year of the mine’s life.
As proposed, mining will begin with the TG-1 oxide gold-silver deposit and end with the underlying sulphide reserve. The first phase is now expected to cost US$180 million to complete, and the second, US$145 million.
The projections include contigencies but exclude general sales taxes because they are recouped as credits during operations. Costs for the second phase also assume funding by way of internal cash flow and include extra expenses arising from equipment purchases and expansion of the tailings pond.
The prefeasibility study had pegged capital costs for the first phase and the second phase at US$173 million and US$97 million, respectively. The considerable increase in the second phase reflects the increased production forecast.
Mining of ore and waste for the gold-silver phase will be done by a contractor, owing to the need to use small equipment. The company will take over in the second phase.
Stripping ratios are pegged at 2.6:1 for the first phase and 1.1:1 for the second. On average, 7,500 tonnes of material will be sent to the mill daily in the first two years — 10,000 tonnes in the third year and 20,000 tonnes in the fourth, when the grinding line from the gold-silver circuit is converted.
Annual production from the oxide deposit, which will be depleted in 3.5 years, is forecast at 260,000 oz. gold and 3.2 million oz. silver. The base metal operation lasts nine years.
Mining costs in the first phase are pegged at US$1.12 per tonne; processing costs, at US$6.20 per tonne. These fall to US90 and US$4.94 once the flotation cells are running at full capacity.
Average cash costs are expected to ring in at US$83 per oz. gold, net of silver credits, in the first phase and US49 per lb. copper, net of zinc and precious metals credits, thereafter.
Manhattan had expected to finish the TG-1 oxide study a year ago but was delayed because of vandalism at the site. The company blames a group whose aim was to disrupt government and industrial activities heading into Peruvian elections.
The mines minister at the time, Carlos Herrerea Descalzi, noted that while the final decision will rest with the people, it was important for them to wait for the conclusion of all studies. He said the law did not oblige that the project be executed “if the people do not accept it . . .”
Since then, a new government has been elected, led by Alejandro Toledo. At the country’s 25th mining convention, held in September, Toledo vowed to keep mining strong in Peru.
“My administration not only has the implicit will to build the economic and political stability, but also the juridical stability,” Toledo asserted. “When agreements are signed, they will be ensured.”
Manhattan Minerals has participated in talks with the new mines minister, Jaime Quijandria. Those talks led to the feasibility study and environmental impact study, for which final drafts are being prepared.
But opposition to the project has not subsided: earlier this summer, residents of Tambogrande overwhelming voted against the project’s development in a local, non-binding referendum. Because some of the deposit underlies part of the town, about half its population (16,000) must be resettled if mining is to proceed — a contigency which the company has accounted for in its capital projections.
In response to the vote, Roberto Obradovich, who heads up Manhattan’s local unit, told a Peruvian radio station that “the vote was full of flaws,” adding that “it seems suspicious that ninety-three or ninety-four per cent voted no, whereas ten thousand people didn’t turn up. We have to assume that means that those absent at least want to hear more about the project.”
According to wire reports, nearly 98.7% of the valid ballots were opposed to Manhattan’s plans, but 27% of the 36,000 eligible voters failed to turn out.
In mid-September, Manhattan reported that congressmen from the Piura Department (where Tambogrande is situated) have sponsored a motion in the Peruvian Congress supporting the Tambogrande project. The motion recommends that the government’s executive branch approve the transfer of the federal governemnt’s 25% ownership of the project to the regional government and that a third party review of the environmental impact study.
Manhattan can earn a 75% stake in Tambo Grande, which consists of 10 concessions measuring 100 sq. km. The company has until May 2003 to complete the feasibility study and secure development financing.
Probable reserves in the oxide portion of the TG-1 desposit total 8.2 million tonnes grading 3.34 grams gold and 58.7 grams silver per tonne. The sulphide portion has probable reserves of 57.8 million tonnes running 1.5% copper and 0.9% zinc, plus 0.5 gram gold and 25 grams silver per tonne.
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