LatAm mining studies reveal US$4bn growth opportunity

Latin America’s mining companies are targeting production growth in a strong price environment after a flurry of studies paved the way for US$4bn of investments.

Studies at eight projects completed in 2022 – ranging from the PEA to feasibility stages – revealed combined production potential of around 175,000t/y copper, 560,000oz/y gold and 15,200t/y lithium carbonate, along with zinc, silver and lead by-products.

The aggregate capex of the eight projects amounts to US$3.97bn.

The projects represent major milestones at the assets, with companies now focused on the next steps, including construction, financing, permitting and further exploration work and technical studies.

TOP 2022 LATAM MINING STUDIES

1. Cañariaco, Peru. Capex: US$1.04bn

Main metals: Copper, gold

Study: PEA

Candente Copper's Cañariaco PEA is the highest capex study released to date in 2022, despite achieving a significant cut in upfront costs.

The study estimates pre-production capital of US$1.04bn, based on an initial 40,000t/d-throughput operation, doubling to 80,000t/d in year seven funded with cash flows. Capex was US$1.60bn in a 2011 pre-feasibility study.

The February study also incorporates dry stack tailings management facility, reducing the project’s environmental impacts.

Production is forecast at about 78,500t/y copper and 31,000oz/y gold over a 28-year mine life, with post-tax IRR at 16.3% at US$3.50/lb copper and US$1,650/oz gold prices.

“The very large database from previous engineering work supports the 2022 PEA, which together could allow moving directly into a feasibility evaluation phase,” CEO Joanne Freeze said. 

2. Maricunga, Chile. Capex: US$626mn

Metal: Lithium

Study: Feasibility

Minera Salar Blanco (MSB) is targeting a 2022 investment decision at the Maricunga project after a feasibility study showed the potential for one of the world’s lowest cost lithium carbonate operations.

The January study showed total project capex of US$626mn for a mine producing 15,200t/y lithium carbonate equivalent over 20 years, with operating expenditures estimated at US$3,718/t, excluding potassium chloride by-product credits.

The priority for 2022 is to finalize financing, while work is underway to evaluate a stage 2 expansion, MSB CEO Cristobal Garcia-Huidobro said in a release by Bearing Lithium.

Bearing holds a 17.1% interest in MSB, with Lithium Power International owning 51.6% and Borda Group in Chile 31.3%.

3. Cerro Blanco, Guatemala. Capex: US$572mn

Metal: Gold

Study: Feasibility

Bluestone Resources confirmed the strong economics of its Cerro Blanco project in Guatemala (pictured) in a February feasibility study, which showed a post-tax IRR of 30.2% at US$1,600/oz gold and capex of US$572mn.

“The feasibility study highlights some of the best economics for a gold project seen in recent studies and is a major milestone on the path to the development of the Cerro Blanco mine, providing a blueprint for the detailed engineering phase and construction of the project,” CEO Jack Lundin said in a release.

An environmental permit amendment application for the shift to open pit operations has been submitted, with Bluestone hoping for approval in Q3, with detailed engineering and design activities due to kick off this year.

4. Tocantinzinho, Brazil. Capex: US$458mn

Metal: Gold

Study: Feasibility

G Mining Ventures is targeting a swift start to construction at Tocantinzinho in Brazil after a feasibility study confirmed robust economics.

The Pará state asset will deliver 174,700oz/y gold over a 10.5-year mine life, with initial capex at US$458mn and post-tax IRR of 24% at US$1,600/oz gold, according to the February study.

The company aims to secure 60-70% of financing from non-equity sources and begin construction in mid-2022.

5. Escalones, Chile. Capex: US$438mn

Metal: Copper

Study: PEA

Escalones promises to become one of the region’s most profitable copper operations, according to a February PEA.

The study showed a 46.2% post-tax IRR at US$3.60/lb copper prices – the highest of any 2022 study – pegging production at about 52,000t/y copper over a 20-year mine life, according to a release by World Copper.

The company plans to advance Escalones through development and permitting, while continuing exploration.

6. Alacrán/San Matías, Colombia. Capex: US$435mn

Metals: Copper, gold.

Study: Pre-feasibility

Cordoba Minerals is targeting further exploration successes at Alacrán after a pre-feasibility study showed an economically viable project.

The January study showed a US$435mn investment for a 22,000t/d throughput open pit mine, delivering average output of about 31,000t/y copper and 55,000oz/y gold over a 13-year mine life.

Post-tax IRR is 25.4% at US$3.60/lb copper and US$1,650/oz gold prices.

“The combination of infill drilling in the Alacrán deposit and the inclusion of satellite deposits has the potential to significantly add value to the project and potentially extend the mine life,” Cordoba said in a release.

7. La Mina, Colombia. Capex: US$299mn

Metal: Gold

Study: PEA

GoldMining achieved a major milestone at La Mina with the completion of a PEA in January, and the company is targeting further improvements.

The study showed a US$299mn initial capex project producing 102,000oz/y gold over a 10.4-year mine life, as well as copper and silver by-products, based on an open pit scenario tapping the La Cantera and Middle Zone deposits.

Post-tax IRR is 14.5% using US$1,600/oz gold prices.

“The independent PEA provides a compelling base case assessment for a mining operation with additional potential available through proposed exploration of the adjacent La Garrucha deposit,” the company said.

8. Yauricocha Expansion, Peru. Capex: US$102mn

Metals: Copper, zinc, silver

Study: PEA

Sierra Metals reported results of an updated PEA for an expansion of its Yauricocha mine, which is expected to deliver net post-tax cash flow of US$408mn for initial development and expansion capital of US$102mn.

The project involves boosting processing capacity to 5,500t/d in 2024 from 3,600t/d currently, delivering production of 333Mlb (151,000t) copper, along with zinc, silver, lead and gold, over an 11-year mine life.

“This result [of the PEA] underpins the strategy of incremental organic expansions at our operations, supported by their resource endowment, and our focus on base metals going forward,” CEO Luis Marchese said in a January release.