Project Spotlight: Vizcachitas, the largest independent copper project in the Americas

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Thursday, February 15, 2018

In mid-December, Canada-based Los Andes Copper reported results of metallurgical testing at its Vizcachitas copper-molybdenum project in the Rocín valley in central Chile's Valparaíso region (V). The results included overall copper recoveries of over 90% at significantly coarser grinding levels comparing to historical test work.

"This reduction in grinding for the rougher flotation stage would result in a decrease in the power and water consumption of the project. These reductions could have significant effects in mill throughput and operating costs, as well as help reduce the environmental footprint of the project," said Los Andes's president and CEO Antony Amberg in a statement.

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In March 2017, Los Andes announced that it had started a work program at Vizcachitas, including a 10,000m diamond drill campaign in the higher grade central core of the deposit. An updated resource estimate and PEA are expected to be issued during the first quarter of 2018.

THE PROJECT

Vizcachitas is a copper-molybdenum porphyry deposit with a concession area covering approximately 250km², of which just 9 km² have been significantly explored. Owned entirely by Los Andes Copper, the company describes the project as the largest copper deposit in the Americas not controlled by a major mining company.

A 2014 preliminary economic assessment (PEA) outlined a mining operation with a throughput of 176,000t/d and average copper production of 179,000t/y copper in concentrate over a 28-year mine life. Initial capital expenditure would be US$2.9bn.

The project is expected to be a low-strip, open-pit operation with operating costs of US$10.85/t of ore processed, according to the PEA.

The PEA, prepared by consultants Coffey and Alquimia Conceptos, was based on an indicated resource of 1.038Bt grading 0.43% copper equivalent, containing an estimated 8.5Blb of copper (3.86Mt) and 281Mlb of molybdenum.

The Vizcachitas deposit also contains an inferred resource of 318Mt grading 0.41% copper equivalent - using a cutoff of 0.3% - containing an estimated 2.4Blb of copper and 88Mlb of molybdenum.

The PEA evaluated four mining and throughput scenarios: 44,000t/d, 88,000t/d, 176,000t/d and a scaled approach starting at 88,000t/d increasing to 176,000t/d. The 176,000t/d case was selected to be the base case as it produced the highest net present values (NPV), the company said.

On a pre-tax basis, the base case results in an NPV of US$746mn, an internal rate of return of 11.4% and an estimated payback period of 5.9 years.

DRILLING

A total of 165 diamond drill holes have been drilled on Vizcachitas since 1993, totaling 52,256m.

A 2015-2016 drill campaign indicated that the central higher grade core extends over an area of at least 1,400m by 700m.

A 10,000m drilling campaign began in February 2017 to test the extensions of the geological model and improve the understanding of sections deeper in the central core. The goal is to update the resource model and optimize the PEA.

CHALLENGES

In April 2017, Los Andes Copper's local subsidiary, Compañía Minera Vizcachitas CMVH, received a notification from Chile's environmental superintendence, SMA for alleged infringements resulting from the company's failure to obtain an environmental permit for the drill campaign undertaken in 2015-2016. The infractions were classified as "very serious", leading to the revocation of the environmental permit, a fine of 10,000 UTM or the project's closure.

The notification alleged that the company had set up 82 drilling platforms, some 62 more than the maximum of 20 permitted, and that the activities carried out since 2015 constitute a modification of the original exploration project carried out between 2007 and 2008.

The SMA notification also stated that "the works associated with the development of the exploration activity of the mining company resulted in various transgressions of the rules, which seriously affected the native flora and fauna, as well as the alteration and contamination of the water courses of the Rocín and Putaendo rivers."

These charges were filed based on complaints from local civil society groups dating to 2015.

"CMVH believes the notification to be without merit as it relies on the fact that CMVH required a license that Chilean regulations do not demand for mining exploration drilling campaigns under 20 drilling platforms, which is the case of the 2015-2016 drill campaign," read the management's discussion and analysis (MD&A) document from September 2017.

Los Andes Copper responded with a compliance plan, which the SMA approved in December 2017.

"Pursuant to the plan, the company is required to incur expenditures totaling approximately US$267,000 for vegetation enrichment, construction of stone walls, preparation and processing of environmental approval package and professional fees," states the MD&A text.

The company was confronted with opposition from the Rio Putaendo monitoring committee, which asked the SMA to reject the plan.

WHAT COMES NEXT?

Los Andes is working to collate the results of its recent drilling programs into an updated NI 43-101 resource estimate.

The company expected to publish the results in January, but Los Andes CEO Antony Amberg told BNamericas: "We're still working on the results estimate. We published the drilling results and test work from 2017, and they're looking good. But at the moment we can't talk about the resource estimate or the revised PEA. This should be published in the first quarter of 2018."