Vancouver – The price-tag to develop Minera Andes‘ (MAI-T) Los Azules copper project is US$2.7 billion, the company reports in a prefeasibility study.
The prefeasibility study has the remote project, lying at an altitude of between 3,500 and 4,500 metres in the Argentinean Andes, producing 170,000 tonnes of copper a year over 24 years. Minera Andes based the open-pit in the study on an 843-million-tonne inferred resource estimate grading 0.51% copper.
Pre-production stripping would take out 150 million tonnes and once mining began the waste-to-ore strip ratio would be 1.5:1.
Minera Andes estimates cash costs of US85¢-per-lb. copper net of by-product credits which include gold and silver.
With the price of copper set at US$1.90 per lb. and a discount rate of 8% the project returned a net present value of US$496 million and an internal rate of return of 10.8%.
Due to its remote location in the mountainous San Juan province needed infrastructure include: extension of the power grid, a road and on-site living facilities.
Although Minera Andes has a 100% option on the property from Xstrata (XSRAF-O, XTA-L), the prefeasibility study appears to satisfy a condition for Xstrata’s 51% back-in right.
Minera Andes says the condition was completion of a technical report showing Los Azules could produce more than 100,000 tonnes of copper for at least ten years.
There is also some confusion over Xstrata’s option on the property which it received from Solitario Argentina.
Minera Andes says Xstrata and Solitario Argentina are disputing conditions of Solitario’s own 25% back-in right with Xstrata. Apparently the two are at issue over a 36-month deadline and attached conditions for that back-in right.
In addition to the Los Azules project, Minera Andes has a 49% stake in the San Jose gold-silver mine, also in Argentina.
Hochschild Mining, which owns the other 51%, operates the mine and in 2008 removed about 296,000 tonnes of ore grading 6.69 grams gold per tonne and 559 grams silver per tonne for contained metal of 54,000 oz. gold and 4.4 million oz. silver.
In October it completed a capacity doubling at the mine to 1,500 tonnes per day.
On news of the prefeasibility study Minera Andes gained 3¢ to close at 36¢. It has about 190 million shares outstanding.
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