- Published: 09 February 2009
- Written by Editor
Centenario Copper Announces Highlights of New Mine Plan
Centenario Copper Corporation ("Centenario", or the "Company") (TSX: CCT) announces the highlights from a new mine plan (the "New Mine Plan"), which integrates an oxide starter pit from the China deposit into the existing Franke mine plan. The China deposit is located within the Pelusa Property and is 6 km from the Franke processing plant. China ore will be trucked to the Franke plant for processing, with only minor modifications required to the existing plant. A NI 43-101 compliant Technical Report (the "Integrated Technical Report") will be filed on SEDAR and on the Company's web site within 45 days of this release.
The technical information contained herein reflects Centenario's plans relating to the optimal mining sequence and other operational and capital considerations relating to the Franke project.
This morning, the Company announced it had entered into an agreement with respect to a business combination (the "Transaction") with Quadra Mining Ltd. ("Quadra). In connection with the Transaction, Centenario and Quadra management have established a joint technical committee that will review all aspects of the Franke project which may result in modifications to the technical information contained herein. Quadra is aware of the input data for the Integrated Technical Report, as provided under a confidentiality agreement, and has considered this in its offer to Centenario, but it has not been involved in the Integrated Technical Report. Further guidance will be given in due course.
Key highlights include:
- New Mine Plan based on Franke and China Oxide Leachable Measured & Indicated Mineral Resources of 48.6 million tonnes @ 0.77% CuT and excludes China Mixed and Secondary Sulphide Mineral Resource of 17.1 million tonnes @ 0.53% CuT, which may be considered for inclusion in the mine plan following feasibility level metallurgical test work.
- Proven & Probable Mineral Reserves increase by 10.0 million tonnes to 41.7 million tonnes @ 0.75% CuT, from 31.7 million tonnes @ 0.83% CuT.
- Life-of-Mine copper cathode production increases by 93 million lbs (19%) from 501 million lbs to 594 million lbs
- Pending timely environmental approvals, China oxide ore to be blended with Franke ore on a 75% China / 25% Franke basis, starting late Q1 2009 through to late 2010. Metallurgical test work confirms anticipated recoveries and significant reduction in overall acid consumption for 2009-2010, compared to 100% Franke scenario.
- Total project capital costs estimated at US$239 million.
- LOM cash cost of US$1.29/lb, using a Base Case flat copper price of US$1.75/lb.
- Franke plant construction and pre-commissioning substantially complete and plant ready to operate; startup yet to commence due to lack of funding resolution with the Company's lenders; resolution anticipated in connection with proposed Transaction with Quadra.
Mineral Resources:
The following table sets out the Measured and Indicated Leachable Mineral Resources for the Franke and China deposits:
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Measured & Indicated Leachable Mineral Resource (0.3% CuT Cut-off) (a) (b)
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Measured Indicated
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Category Tonnes CuT CuS Cu. CO3 Tonnes CuT CuS Cu. CO3
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mm mt % % mm lb % mm mt % % mm lb %
Franke In-situ 26.8 0.86% 0.59% 502 4.2% 9.0 0.76% 0.60% 151 4.3%
Franke Dumps 0.9 1.00% 0.78% 19 3.9%
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Total Franke 27.7 0.86% 0.60% 521 4.2% 9.0 0.76% 0.60% 151 4.3%
China Oxide 8.3 0.58% 0.50% 107 1.6% 3.6 0.52% 0.43% 41 2.1%
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Franke+China Ox 36.0 0.80% 0.58% 628 3.6% 12.6 0.69% 0.55% 192 3.7%
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China Mixed 7.0 0.54% 0.31% 84 2.1% 0.9 0.56% 0.21% 11 3.1%
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China Sec.Sulp. 7.4 0.53% 0.07% 88 2.2% 1.8 0.44% 0.07% 17 2.8%
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Other China 14.4 0.53% 0.19% 172 2.2% 2.7 0.48% 0.12% 28 2.9%
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Combined 50.4 0.72% 0.47% 800 3.2% 15.3 0.65% 0.47% 220 3.5%
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(a) Excludes Inferred Mineral Resource of 3.3 million mt @ 0.89% CuT
(Franke - 2.5 million mt @ 1.02% CuT; China - 0. 8 million mt @ 0.48%
CuT)
(b) Excludes primary sulphide mineral resource: Measured & Indicated of 4.2
million mt @ 0.41% CuT; Inferred 1.8 million mt @ 0.46% CuT
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Measured & Indicated Leachable Mineral Resource (0.3% CuT Cut-off) (a) (b)
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Measured & Indicated
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Category Tonnes CuT CuS Cu. CO3
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mm mt % % mm lb %
Franke In-situ 35.8 0.83% 0.60% 653 4.2%
Franke Dumps 0.9 1.00% 0.78% 19 3.9%
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Total Franke 36.7 0.83% 0.60% 672 4.2%
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China Oxide 11.9 0.57% 0.48% 148 1.7%
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Franke+China Ox 48.6 0.77% 0.57% 820 3.6%
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China Mixed 7.9 0.55% 0.30% 95 2.2%
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China Sec.Sulp. 9.2 0.52% 0.07% 105 2.3%
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Other China 17.1 0.53% 0.18% 200 2.3%
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Combined 65.7 0.71% 0.47% 1,020 3.2%
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(a) Excludes Inferred Mineral Resource of 3.3 million mt @ 0.89% CuT
(Franke - 2.5 million mt @ 1.02% CuT; China - 0. 8 million mt @ 0.48%
CuT)
(b) Excludes primary sulphide mineral resource: Measured & Indicated of 4.2
million mt @ 0.41% CuT; Inferred 1.8 million mt @ 0.46% CuT
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The Measured and Indicated Mineral Resources have been developed at a 0.3% cut-off grade, consistent with previous Company practice. The Mineral Resources were developed by Geovectra S.A., a Santiago, Chile based geological services firm and have been audited and accepted by various Qualified Persons as follows: The Franke Measured and Indicated Mineral Resource was previously reported in a NI 43-101 Technical Report, dated March 31, 2008. The China Measured and Indicated Mineral Resource was previously reported in a news release, dated August 20, 2008, with Tom Henricksen acting as the Qualified Person, for purposes of NI 43-101. Tom Henricksen is the Qualified Person, for purposes of NI 43-101, for the Mineral Resource statement contained herein. The Mineral Resources are inclusive of the Mineral Reserves set out below.
The table above excludes a total of 3.3 million tonnes @ 0.89% CuT of Inferred Leachable Mineral Resources and a primary sulphide Mineral Resource which includes a Measured and Indicated Mineral Resource of 4.2 million tonnes @ 0.41% CuT and an Inferred Mineral Resource of 1.8 million tonnes @ 0.46% CuT.
Mineral Reserves:
The New Mineral Reserves have been developed by Ricardo Palma, a principal of NCL Ingenieria y Construccion ("NCL"), a Santiago, Chile based engineering consulting firm and have been audited and accepted by Rodrigo Mello, a consultant to NCL and the Qualified Person for purposes of NI 43-101.
The New Mineral Reserves include the Franke and China oxide portions of the Measured and Indicated Leachable Mineral Resource and discrete recovery formulas have been applied to each deposit. Whittle pit evaluation was performed using a copper design price of $2.00/lb, with all ore blocks having a net profit cut-off of greater than zero. Whittle pit sensitivity analysis demonstrated that the Mineral Reserves are relatively insensitive to the selected design price over the range of $1.75-$2.25/lb. Operational mine planning was performed to a feasibility level of evaluation. The New Mineral Reserves are set out in the table below:
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--Mineral Reserves: Franke + China Oxides (Net Profit Cut-off greater
than 0) (a)
Tonnes CuT CuS In Situ Cu CO3
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k mt % % mm lb %
Proven:
Franke In Situ 24,982 0.84% 0.60% 461 3.9%
Franke Dumps 361 0.88% 0.71% 7 2.5%
China Oxide 7,106 0.55% 0.47% 87 0.9%
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Total Proven 32,449 0.78% 0.57% 555 3.2%
Probable:
Franke In Situ 6,715 0.75% 0.61% 111 3.5%
Franke Dumps -
China Oxide 2,543 0.49% 0.40% 28 1.1%
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Total Probable 9,258 0.68% 0.55% 139 2.9%
Proven & Probable:
Franke In Situ 31,697 0.82% 0.60% 572 3.8%
Franke Dumps 361 0.88% 0.71% 7 2.5%
China Oxide 9,649 0.54% 0.45% 114 0.9%
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Total Proven & Probable 41,707 0.75% 0.57% 694 3.1%
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(a) Based on a copper price of US$2.00/lb
Franke Recovery formula equals 92.7(i)(CuS/CuT)+70(i)(1-CuS/CuT)
and net profit cut-off greater than 0
China Recovery formula equals 92.2(i)(CuS/CuT)+48.5(i)(1-CuS/CuT)
and net profit cut-off greater than 0
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Proven and Probable Mineral Reserves have increased from 31.7 million tonnes at an average 0.83% CuT to 41.7 million tonnes at an average 0.75% CuT. Total contained copper has increased by 115 million lbs from 579 million lbs to 694 million lbs. The 0.08% decrease in the overall copper grade is due to the lower average total copper grade of the China oxide Mineral Reserve. A significant portion of the dumps have been conservatively excluded from the New Mineral Reserve, as it is believed that a considerable portion of the material will be difficult to recover in normal mining operations. Proven Mineral Reserves account for 78% of Proven and Probable Mineral Reserves compared to 81% in the March 2008 Franke Technical Report.
In developing the Mineral Reserves, only the oxide portion of the China Measured & Indicated Mineral Resource (11.9 million tonnes @ 0.57% CuT) was considered, since it is the only part of the China deposit where metallurgical column test work has been included. To date, the Company has undertaken bottle role and sequential assay analysis on the mixed and secondary sulphide zones (17.1 million tonnes @ 0.53% CuT), but additional column based test work is required in order to consider this portion of the China Mineral Resource for Mineral Reserve evaluation purposes. This work is planned to commence shortly.
New Mine Plan:
Centenario developed the New Mine Plan in conjunction with Ricardo Palma of NCL and it has been audited and accepted by Rodrigo Mello, a consultant to NCL and the Qualified Person for purposes of NI 43-101. The New Mine Plan is subject to review by Quadra, and the particulars of the New Mine Plan will be set out in the Integrated Technical Report.
The New Mine Plan incorporates a total of 41.7 million tonnes of ore and 48.4 million tonnes of waste, for a LOM average strip ratio of 1.2:1. The New Mine Plan projects an average annual production of 69 million lbs a year of copper cathode over a projected mine life of 8.6 years. Initial production will be from the Franke pit, until the China pit becomes available, subject to timely receipt of environmental approval and related permits. The Franke pit and China oxide pit are then to be mined concurrently until the China pit is depleted, with only the Franke pit being operational thereafter. China ore is transported approximately 7 km by haulage road to the Franke processing plant, and blended with Franke at an average ratio of 75% China ore / 25% Franke ore until the end of the second year of production. In order to increase the grade of processed material in the early years, a portion of ore from each pit is stockpiled during the first two years of production, for processing in later years.
Initial crushing capacity has been assumed at 11,100 tonnes per day, increasing to 13,200 tonnes per day approximately four months after initial startup. Average head grades remain fairly constant over the majority of the mine life, falling off in the final year of production as residual stockpile material is consumed. All ore is placed on an on-off pad, with spent ore being removed and transported to the Franke waste dump. Overall recoveries are projected to average around 86% over the life-of-mine, with lower recoveries assumed in the first year of production based on an expected learning curve.
Operating Costs:
The Company has entered into a number of contracts and letters of intent relating to the operation of the Franke Project, including contract mining, ore haulage to the process plant, spent ore removal from the leach pad to the waste dump, various aspects of the plant operations, plant maintenance, camp services, lab and pilot plant and sulphuric acid transport. Many of these contracts are priced in Chilean Pesos in whole or in part. For translating the costs of these services, the company has developed a formula that correlates the US$/peso exchange rate with the copper price. The base US$/peso exchange rate has been set at 650, at a reference copper price of $1.00/lb, with the exchange rate declining by 25 pesos for each $0.50/lb increase in the copper price. Approximately 1/3 of total cash operating costs are denominated in Chilean Pesos, with the balance in US$.
The Company has entered into various contracts for the long-term supply of sulphuric acid. The largest contract is for the provision of 150,000 tonnes per year for a period of 14 years, with a pricing formula based on the copper price. Pricing under other contacts is based on market conditions. Based on contracts already in place, the Company believes that has already secured access for all of its anticipated acid requirements for 2009 and 2010 and the majority of its requirements thereafter. For purposes of the cost projections contained herein, the acid price for these market priced contracts has been assumed to be $135/mt for 2009 and $100/mt for 2010 (excluding acid transport). For 2011 and thereafter, the market acid price is assumed to vary with the copper price, with a base level of $50/mt (excluding transport) at a reference copper price of $1.00/lb, increasing by $2.75/mt for each $0.10/lb increase in the copper price.
Water is being provided under a 14 year contract with the Salvador division of Codelco, with a pricing formula based on the copper price. The Company has also developed an algorithm in which the diesel price varies with the price of copper. The base diesel price has been set at $0.43/litre, at a copper price of $1.00/lb, with the diesel price increasing by $0.10/litre with each $0.50/lb increase in the copper price.
As a result of the assumed or actual correlation between the copper price and the cost of the various services contracts, sulphuric acid contracts and the diesel price, the overall cash operating cost will vary with the copper price. At a copper price of $1.75/lb, the average life-of-mine cash cost is projected at $1.29/lb. For each $0.25/lb movement in the copper price, the operating cost is assumed to vary up or down by approximately $0.05/lb. The life-of-mine average plant operating costs by area and by input are summarized in the following tables, at an assumed copper price of $1.75/lb. These operating costs have been developed by Centenario management. Walter Segsworth, Chairman of the Company, has reviewed the operating cost estimates and is the Qualified Person for purposes of NI 43-101 for operating cost estimates contained herein.
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Cash cost by Activity (LOM Average) - Cu Price of $1.75/lb
US$ 000/yr US$/lb Cu. US$/mt Ore % Total
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Mining $19,141 $0.28 $3.96 21.5%
Crush-Leach-Spent Ore $17,444 $0.25 $3.61 19.6%
Acid $27,802 $0.40 $5.75 31.2%
SX-EW $13,307 $0.19 $2.75 14.9%
S G & A $11,448 $0.17 $2.37 12.8%
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Total Operating Costs $89,142 $1.29 $18.43 100.0%
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Cash cost by input (LOM Average) - Cu Price of $1.75/lb
US$ 000/yr US$/lb Cu. US$/mt Ore % Total
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Labour (Ex Mining) $7,548 $0.11 $1.56 8.5%
Mining Contract $14,166 $0.21 $2.93 15.9%
Spent Ore Handling Contract $3,483 $0.05 $0.72 3.9%
Maintenance Contract $5,402 $0.08 $1.12 6.1%
Acid $27,802 $0.40 $5.75 31.2%
Water $1,681 $0.02 $0.35 1.9%
Power $9,279 $0.13 $1.92 10.4%Diesel $5,515 $0.08 $1.14 6.2%
Consumables $3,625 $0.05 $0.75 4.1%
Cathode Transport $3,570 $0.05 $0.74 4.0%
Camp,Lab,Pilot Plant,Other $7,070 $0.10 $1.46 7.9%
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Total Operating Costs $89,142 $1.29 $18.43 100.0%
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As set out above, acid constitutes the largest operating cost at 31.2%, or $0.40/lb of copper. Mining and spent ore handling represent 19.8% of total costs. Power and diesel together represent 16.6% of costs. Labour and maintenance activities represent 14.6% of total costs, with water and other consumables, cathode transport and camp and related activities taking up the remaining 17.8% of costs. All maintenance is expensed in the period in which it is incurred.
Capital Costs:
The project is being developed as a conventional SX-EW cathode project, capable of producing in excess of 30,000 tonnes of cathode copper per annum. As of the date hereof, the construction of the plant is essentially complete, with final pre-commissioning activities remaining in the wet (SX-EW) area, balance of plant and certain non critical capital items. Preparations are ongoing to initiate operations although the startup phase has yet to commence due to ongoing funding uncertainties with the Company's lenders. Upon commencement of ore placement on the leach pads, it is anticipated that cathode production will commence approximately 49 days thereafter.
The final projected capital cost for the project is US$239 million, including US$212 million in direct and indirect capital costs, US$14 million in Owner Costs and US$13 million in pre-startup and work-in-progress working capital. These capital cost estimates have been derived from estimates developed by Centenario and AMEC, which is acting as the Project Manager for the Franke Project. Walter Segsworth, Chairman of the Company, has reviewed the capital cost estimates and is the Qualified Person for purposes of the capital cost estimates contained herein. This capital cost estimate is under review by Quadra and may change.
Technical Report
Centenario has retained Tom Henricksen and NCL Ingenieria y Construccion in connection with the preparation of an updated NI 43-101 Technical Report (the "Integrated Technical Report") which will include the technical information contained herein and additional technical information required by NI 43-101. The Integrated Technical Report will be completed and filed on SEDAR and Centenario's web site within 45 days of this release.
All principal technical personnel participating in the development and review of the Integrated Technical Report have extensive relevant experience and have visited the Franke and China properties. Jozsef Ambrus, a geologist and principal of Geovectra S.A., was responsible for the development of the New Mineral Resource Model. Tom Henricksen, a geologist and independent consultant, was the Qualified Person who reviewed and approved the New Resource Model and metallurgical inputs, and has in excess of 35 years of experience in resource and metallurgical evaluation. Ricardo Palma, an engineer and principal with NCL was responsible for the development of the New Mine Plan and New Mineral Reserves, and has extensive experience in such matters. Rodrigo Mello, a geologist and consultant to NCL, was the Qualified Person who reviewed the New Mine Plan and New Mineral Reserves, and has 23 years of experience in the mining industry, with considerable experience in mine planning and reserve definition of open pit mines similar in production rate and methodology to the envisioned integrated Franke/China project. Walter Segsworth, Chairman of the Company and an engineer, is the Qualified Person for purposes of NI 43-101 for the operating and capital costs contained herein.
Other Information
Additional information related to the Company, including risk factors as set out in the Company's Annual Information Form, is available for viewing on SEDAR at www.sedar.com and at the Company's web site at www.centenariocopper.com.
CENTENARIO COPPER CORPORATION
Richard Colterjohn, President and CEO
About Centenario Copper Corporation:
The Company was founded in 2004 with the goal of becoming a mid-tier copper producer and consolidator, active in regions of low sovereign risk. Centenario currently operates exclusively in Regions II and III of Chile. The Company intends to achieve its goal through the acquisition and development of advanced, mid-sized copper projects and then enhancing the scale and value of its principal projects through the roll-up of smaller satellite copper resources which exist regionally around the principal projects.
The Franke Property, located in Region II, is currently in construction and is projected to produce 30,000 tonnes of cathode copper per year, starting in early 2009. The Company believes that the contiguous Pelusa Property is highly prospective for developing additional leachable copper resources for processing at the Franke plant. The Pan de Azucar Property, located 45 km. from the Franke Property, is currently being evaluated as a possible nucleus for a second property cluster. The Company continues to evaluate other "in region" clustering opportunities which could reinforce its existing property portfolio.
Copies of NI 43-101 Technical Reports on the Franke Property and the Pelusa Property are posted on SEDAR and on the Company's web site. For more information, please visit the Company's website at www.centenariocopper.com.
This Press Release contains "forward-looking information" regarding the business, operations and financial condition of Company, the New Mine Plan and the Franke project that is based on the Company's expectations, estimates, forecasts and projections. This forward-looking information includes, among other things, statements with respect to the integration of the oxide starter pit from the China deposit into the existing Franke mine plan. Forward-looking information contained in this Press Release is subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to:
- Uncertainties related to the accuracy of the reserve and resource estimates at Franke and the geotechnical and density factors and diminishing quantities or grades of reserves.
- Uncertainty that there is sufficient water and acid to adequately accommodate the amount of mine production estimated.
- Uncertainties related to expected mining production rates, timing of production and the associated metal recoveries in the current heap leach piles and future ore phases.
- Unusual or unexpected formations, seismic activity, cave-ins, flooding, pressures, pit wall failures and other similar incidents (and the risk of inadequate insurance or inability to obtain insurance to cover these risks).
- Operating and technical difficulties in connection with mining development or production activities.
- Uncertainties related to judicial or regulatory proceedings.
- Changes in, and the effects of, the laws, regulations and government policies affecting mining operations, particularly laws, regulations and policies relating to:
-- mine expansions, environmental protection and associated compliance costs arising from exploration, mine development, mine operations, reclamation and mine closures;
-- expected effective future tax rates in Chile where Franke is located;
-- the protection of the health and safety of mine workers; and
-- mineral rights ownership in Chile, where the Franke Project is located
- Changes in general economic conditions, the financial markets and in the demand and market price for commodities, such as copper, diesel fuel, petroleum, steel, concrete, electricity and other forms of energy, mining equipment, operating supplies, and fluctuations in exchange rates, particularly with respect to the value of the U.S. dollar and Chilean Peso.
- Environmental issues and liabilities associated with mining including processing and stock piling ore and spent ore.
- Labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in Chile, or extreme weather conditions, environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt the production of minerals in Chile.
This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise.
Contacts: Centenario Copper Corporation Richard Colterjohn President and CEO (416) 360-0059 Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Website: www.centenariocopper.com
SOURCE: Centenario Copper Corporation
mailto:This email address is being protected from spambots. You need JavaScript enabled to view it. http://www.centenariocopper.com
