|
|
 |
FEASIBILITY STUDY
|
CLICK HERE to download executive summary of full report |
|
published August 28, 2007 |
Financial Highlights
| |
Commodity Pricing |
|
Case 1 ($ millions)
|
Case 2 ($ millions) |
Case 3 ($ millions) |
|
NPV 0% |
5,116.6 |
4,468.1 |
2,100.6 |
|
NPV 5% |
2,544.4 |
2,182.9 |
996.8 |
|
NPV 10% |
1,312.2 |
1,093.4 |
459.2 |
|
IRR |
30.2% |
27.4% |
20.9% |
|
Payback Years |
2.9 |
3.2 |
3.0 | *Note NPV is quoted after taxes and royalties. All units in US$.
Case 1 – 60/40 Weighted Average Pricing: M3 uses weighted average metal prices for NI-43-101 reporting purposes, reflecting 60% on three-year historical prices and 40% on two-year forward market prices. These values are $2.61 per pound (lb) copper (Cu), $31.06/lb molybdenum (Mo), $11.37 per ounce (oz) silver (Ag), and $600.20/oz gold (Au).
Case 2 – 36-Month Historical Pricing: For SEC reporting requirements, 36-month trailing average pricing was used at $2.38/lb Cu, $30.47/lb Mo, $9.85/oz Ag, and $536.66/oz Au.
Case 3 – Long Term Metal Pricing: Long-term metal prices were established using the 24-month forward prices for the first operating year trending down to long term fixed prices of $1.50/lb Cu, $15.00/lb Mo, and $10.00/oz Ag and $600.00/oz Au over the next four years.
Annual revenue is determined by applying estimated metal prices to the annual payable metal estimated for each operating year. Sales prices have been applied to all life of mine production without escalation or hedging. The financial evaluation presents the determination of the net present value (“NPV”) after tax, payback period (time in years after production commences to recapture the initial capital investment), and the internal rate of return (“IRR”) for the project. Annual cash flow projections were estimated over the life of the mine based on the estimates of capital expenditures, production costs and sales revenue. The sales revenue is based on the production of three commodities: copper, molybdenum and silver. Gold is also present in the copper concentrates in the form of a saleable by-product credit.
The total capital of new construction (includes all direct and indirect costs), for a 75,000 ton per day (“TPD”) open pit mine and sulfide copper concentrator plant with a heap leach SX-EW plant for the treatment of oxide copper mineral reserve, is estimated to be $782.4 million, excluding $15.4 million for spare parts allocated to working capital. All capital costs are estimated to an accuracy of +/- 15%.
M3’s Conclusion
The results of the FS for the Rosemont Copper Project indicate that the project is technically and economically feasible. There are opportunities for further optimization, and the project can be constructed and operated in an environmentally sound manner. Based on weighted average metal prices of $2.61 per pound of copper, $31.06 per pound of molybdenum and $11.37 per ounce of silver, Base Case 1 would generate an NPV (5%) of approximately $2.544 billion with an IRR of about 30.2% and a payback of 2.9 years on an after tax basis. Cash costs would be valued at $0.38/lb Cu net of by-product credits.
Environmental
Permitting for the Rosemont Copper Project involves federal approvals and requires compliance with the National Environmental Policy Act (NEPA). This in turn requires an Environmental Impact Statement (EIS) and compliance with the Endangered Species Act (ESA) and the National Historic Preservation Act (NHPA). The Company completed the first step for environmental permitting in Arizona by filing Rosemont’s Plan of Operations with the United States Forest Service on July 11, 2007. Based on their review of the plan, the U.S. Forest Service is expected to initiate the EIS, a process that usually takes 12 to 18 months to complete.
Mining & Production
The mining process at Rosemont will be a conventional modern hard rock open pit operation. The open pit mine, concentrator and leaching facilities will include a nominal concentrator production capacity of 75,000 tons per day, for a combined total of 27,375,000 short tons per year over an 18.2 year mine life.The proposed Rosemont mine is expected to produce annually 220 million pounds of recovered copper, 4.5 million pounds of recovered molybdenum, 2.7 million ounces of recovered silver and approximately 15 thousand ounces of gold as a by-product credit over the mine life. The heap leach SX-EW plant is expected to produce an additional 14 million pounds of copper cathode per year for the first 8 years.
Capital Costs
The total capital cost estimate (includes direct and indirect costs) to design, construct and commission the Rosemont facilities is estimated to be $782.4 million, excluding $15.4 million for spare parts moved to working capital. The FS also calculated total capital of new construction (includes direct and indirect costs) for the sulfide only, which was estimated to be $725.6 million, excluding $14.8 million for spare parts moved to working capital. All costs are estimated at an accuracy of ± 15%.
Operating Costs
The average life of mine operating costs for the mining operation is $0.82 per ton mined. These costs include drilling, blasting, loading, hauling, road and dump maintenance and general mining. Mill process operating costs average $3.10/ton of mill ore, which includes crushing and conveying, grinding and classification, flotation and regrind, concentrate thickening, filtration and dewatering, tailings disposal and mill ancillary services. General and administrative costs are $0.24/ton of mill ore. For case1-3 (outlined above), operating costs have been estimated at $0.38/lb Cu, $0.41/lb Cu and$0.62/lb Cu respectively. All costs are at an accuracy of ± 10%.
Qualified Person
The FS and NI 43-101 Technical Report were prepared by an integrated engineering team led by M3 Engineering & Technology Corporation of Tucson, Arizona as the primary author of the Technical Report. The Technical Report was conducted under the overall review of Dr. Conrad Huss, P.E., of M3 Engineering & Technology Corporation of Tucson, Arizona, an independent Qualified Person under the standards set forth under NI 43-101.
CLICK HERE for more information on the ownership of the Rosemont property.
|
|
|
