Toronto-based Minera Rayrock (TSE) says initial capital costs to build a new copper mine at 100% owned Ivan property in Chile are estimated at US$19.5 million, including US$3 million for working capital. A final feasibility study to confirm the mine’s economic viability is expected to be completed by August. Having outlined total reserves of nearly 5.2 million tons grading 2.5% copper, Minera proposes to start off with an open pit, heap leach operation that will initially process oxide ore. Deeper sulphide reserves will be developed later by an underground decline.
“By starting off with the oxide reserves and using a low front-end capital cost, we can greatly reduce the financial risk of the project,” said David Hutton, vice-president of exploration and development for Minera.
The Ivan property contains a total of three small copper deposits with both oxide and sulphide portions. The most profitable part is the high-grade sulphide core of the Ivan deposit where grades exceed 5% copper.
Development of the underground sulphide reserves and construction of a concentrator to treat the sulphide ore are planned in the third and fourth years of the mine’s 10-year life. Costs for the underground development, including decline and mining equipment, are estimated at US$16 million and will be funded out of cash flow.
The mine’s production will average 20 million lb. of copper per year, peaking at 31.8 million lb. in the fifth year. Costs are expected to average around US57 cents per lb. in the first five years and US65 cents per lb. over the entire 10-year mine life.
Assuming a copper price of US$1 per lb., Minera estimates payback of all invested capital in the first four years. Shares of Minera, of which there are nearly 14.5 million issued and outstanding, recently rose to $1.32, up from a low of 79 cents last month. The company is 56% owned by Rayrock Yellowknife Resources (TSE).
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