Los Andes Copper Announces Positive PEA Results for Its Vizcachitas Project After-Tax NPV8% of US$ 1.8 billion and IRR of 20.77% at US$ 3.00/lb Copper Payback period of 3.4 years from initial operations; 5.4 years from initial construction
Los Andes Copper Announces Positive PEA Results for
Its Vizcachitas Project
After-Tax NPV8% of US$ 1.8 billion and IRR of 20.77% at US$ 3.00/lb Copper
Payback period of 3.4 years from initial operations; 5.4 years from initial construction
45 year mine life
0.53% CuEq average headgrade to mill over first 5 years of operation
C1 Cash Cost (net of by-product credits) of US$ 1.36/lb for first 8 years of operation; US$ 1.58/lb for LOM
1,284 million tonnes of Measured and Indicated Resources with a 0.45% CuEq grade and 0.40% Cu grade (at 0.25%
Cu cut-off grade)
Vancouver, British Columbia--(Newsfile Corp. - June 5, 2019) - Los Andes Copper Ltd. (TSXV: LA) ("Los Andes", or the
"Company") is pleased to announce the results of an updated Preliminary Economic Assessment (PEA) for its 100%-owned
Vizcachitas Project, a copper-molybdenum porphyry deposit located in central Chile, approximately 150 km northeast from
Santiago.
The PEA was prepared by Tetra Tech Chile S.A. (Tetra Tech), a leading global provider of consulting and engineering services.
The Project considers an open pit mine and concentrator plant that produces copper and molybdenum concentrates. The PEA
evaluated three cases with mill throughputs of 55 ktpd, 110 ktpd and 200 ktpd. The 110 ktpd case has been recommended to
advance into pre-feasibility. This case not only delivers the best economic results, with an After-Tax NPV
8
%
of US$ 1.8 billion, an
IRR of 20.77% and a payback period of 3.4 years, but also optimizes the mining and technical aspects for a mineral deposit of
the size of Vizcachitas.
Highights:
Table 1
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(*) Referred to first year of mill production. Payback period considers nominal cash flows.
(**) Referred to the beginning of construction. Payback period considers nominal cash flows.
Notes
Copper equivalent grade has been calculated using the following expression: Cu
Eq
(%) = Cu (%) + 3.33 x Mo (%) +
82.6389 x Ag (%), using the metal prices: 3.00 USD/lb Cu, 10.00 USD/lb Mo and 17.00 USD/oz Ag. No allowance for
metallurgical recoveries has been considered
Small discrepancies may exist due to rounding errors.
The quantities and grades of reported Inferred Mineral Resources are uncertain in nature and further exploration may
not result in their upgrading to Indicated or Measured status.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
Fernando Porcile, Executive Chairman, commented:
"We are delighted with the results of this PEA which highlight the significant opportunity that the Vizchachitas project presents
and, we believe, it will be Chile's next major copper mine.
"The strong economic viability of the project, with an After-Tax NPV
8%
of US$ 1.8 billion, an IRR of 20.77% and the 3.4 year
payback period, indicates that not only is it financially robust but it also has the ability to generate positive cash flows in a short
period of time. Additionally, the C1 Cast Costs of US$ 1.36/lb for first 8 years of operation put us well within the second quartile
of copper producers and supports a resilient cash flow generation through copper price cycles.
"Vizcachitas currently has a significant Measured and Indicated Resource of 1.284 billion tonnes at a copper equivalent
grade of
0.45%, and production of 110 ktpd will only see half of the resource depleted by the end of the mine life. Additionally, the
mineralization is open at depth and to the north, and Los Andes holds a significant land package in the district, therefore
meaning that there is potential to increase the Resource substantially.
"Being located in Chile presents a huge advantage to Los Andes, with the country being identified as the most attractive
jurisdiction in South America for mining investment. The relatively low elevation and regional infrastructure, including road and
nearby power and rail connections enhance the Project viability.
"The positive results of this PEA allow us to continue to advance Vizcachitas to the next major phase of development, which will
be the PFS, and we anticipate that this will be completed in Q4 2020. We look forward to keeping the market updated with our
progress."
Preliminary Economic Assessment
Comparison to 2014 PEA
The most significant changes from the 2014 PEA are:
The resources have increased significantly and include Measured Resources for 46% of the projected mill feed for the first
10 years of operation for the recommended case.
The metallurgical test work resulted in the adoption of coarser grind for the rougher flotation circuit, increasing the P
80
from
180 μm used previously to 240 μm.
The conditions of the Chilean power market have improved drastically from those presented in 2014, with projected long
term power prices decreasing from US$ 120/MWH to US$ 45/MWH.
A new geological model confirmed the importance of the early diorite porphyry and hydrothermal breccias in controlling the
higher-grade mineralization of the deposit. The new geological model also defined a near surface higher-grade supergene
enriched mineralization outlining an area of 400 by 400 metres where all the drill holes have average supergene grades of
greater than 0.5% Cu.
Project Location
Chile is a well established mining jurisdiction. It has the highest copper reserves and is the largest copper producer in the world.
The country's track record of reliability has been built over decades of pro-mining policies that encourage long-term capital
investment in this sector.
Chile is one of the most developed countries in Latin America, with a stable democratic political system, sustained economic
growth, emphasis on social programmes and high investment grade credit ratings. The country has good universities as well as
skilled engineers and administrators. The mining industry benefits from a highly qualified workforce. Most mining services, from
engineering to equipment procurement, may be sourced from within the country.
The Project is in close proximity to extensive infrastructure, including:
Railway line in San Felipe (65 km distance) with connections to:
The Chagres smelter (90 km) and Ventanas smelter (140 km)
The Port of Ventanas (140 km)
Paved road access (only the last 25 km are unpaved dirt roads)
Access to 220 kv power substation (105 km)
Consumptive water rights (80 km)
There are several nearby cities and towns within a 100-km radius (Los Andes, San Felipe, Putaendo, Catemu, Panquehue, etc.)
with a significant skilled and semi-skilled labour force in the mining sector.
The Project further benefits from a low elevation location permitting year-round access, no equipment de-rating, and no need for
permanent camp installations during the operation phase of the project.
Land Tenure
The project includes 52 mining properties covering a surface area of 10,771 ha and 108 exploration claims for a combined total
of 30,800 ha.
Vizcachitas Geology
The Vizcachitas Project is a mineralized copper-molybdenum porphyry system associated with a complex of hydrothermal
breccias and porphyries within Miocene volcanic rocks.
In 2015 all the diamond drill core was re-logged. From this updated information, a new lithological, alteration and mineralization
model was developed for the Project. The drilling carried out in 2015-2016 and 2017 confirmed the new geological model.
The results from the latest drilling, plus the information provided by historical drilling, show that the core of the Vizcachitas
mineralized system comprises a high-grade early diorite intrusive complex (the average grade for this unit is 0.56% copper) and
two inter-mineral intrusives namely, one early tonalite intrusive and a later granodiorite intrusive (the average grade for these
units is 0.27% copper and 0.17% copper respectively). Associated with these intrusives are hydrothermal breccias and
magmatic-hydrothermal breccia bodies, (the average grade the hydrothermal breccias is 0.54% copper). The final intrusive
events comprise unmineralized phreatomagmatic breccias and a series of dacite dikes that cut the former units.
The copper mineralization is mainly hypogene, predominantly chalcopyrite with some bornite. There is a 100-120 m thick
discrete "blanket" of secondary enrichment developed on the northeastern part of the system, comprised predominantly of
chalcocite, covellite, pyrite and/or pyrite-chalcopyrite (the average grade of this domain is 0.50% copper).
The latest drilling has significantly improved the economic potential of the Project. By separating the geological and mineralizing
events, it has enabled the mine plan to prioritize the higher grade zones in the early years of mine operation.
Drilling
Five different drilling campaigns have been undertaken on the property from 1993 to date. A total of 165 diamond drill holes
have been drilled, with a total of 52,256 m.
Table 2:
Summary Drilling Campaigns in Vizcachitas
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Resources
The mineral resources are contained within an open pit shell to demonstrate the prospects of eventual economic extraction. Only
blocks within the Whittle pit shell are included in the mineral resources.
The tables below present a sensitivity analysis for the mineral resources under different cut-off grades. The base case for the
estimation of resources is 0.25% Cu.
Table 3
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Table 4
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Table 5
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Table 6
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Notes
Copper equivalent grade has been calculated using the following expression: Cu
Eq
(%) = Cu (%) + 3.33 x Mo (%) +
82.6389 x Ag (%), using the metal prices: 3.00 USD/lb Cu, 10.00 USD/lb Mo and 17.00 USD/oz Ag. No allowance for
metallurgical recoveries has been considered
Small discrepancies may exist due to rounding errors.
The quantities and grades of reported Inferred Mineral Resources are uncertain in nature and further exploration may
not result in their upgrading to Indicated or Measured status.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
Mineral Processing and Metallurgical Testing
The Vizcachitas Project has been the subject of a number of physical characterization and metallurgical test programmes to
determine the process flow sheet and expected recoveries. Physical characteristics such as the Bond Work and Abrasion
Indices have been used in the development of the process estimates in this Report. Leach and flotation test work has also been
carried out to further validate process selection and recovery estimations.
The main conclusions of the test work programmes are summarized below:
Mineralogical analysis showed that the principal copper mineral is chalcopyrite.
In general, the results of the flotation tests showed both high grade copper concentrates and high recoveries of both
copper and molybdenum are achievable.
The results suggest that the rougher flotation recoveries are not significantly impacted by the P
80
on the range analyzed
and, on this basis, a coarser primary grind P
80
of 240 μm is proposed.
The results of the cleaner flotation tests indicated that three cleaner stages should be considered to achieve a high final
concentrate grade.
Based on the flotation tests, overall recoveries of 91% copper and 75% molybdenum can be expected:
A copper recovery of 95% in the rougher circuit and 96% in the cleaner circuit
A molybdenum recovery of 84% in the collective circuit and 89% in the selective circuit
Mining
A long-term mine plan study was conducted, which shows the production scenarios defined for the concentrator for each of the
mill throughput cases. The mine plans are strategic and aimed at optimizing the cut-off grade profiles to obtain the best
economic value. The analysis considered a wide array of mine capacity possibilities and the adjustment of stockpile cut-off
grades.
The mineral flow in the mine plan was optimized by separating the mined material into four categories namely:
Mine to Mill: mineral shipped direct to the mill, with a variable cut-off grade
High-Grade Stockpile: mineral with grade below direct Mine to Mill and above a cut-off grade of 0.34% CuEq for the 55
ktpd and 110 ktpd cases (0.25% CuEq for the 200 ktpd case)
Medium-Grade Stockpile: mineral with grade below High-Grade Stockpile and above a cut-off grade of 0.25% CuEq for
the 55 ktpd and 110 ktpd cases (0.20% CuEq for the 200 ktpd case)
Low-Grade Stockpile: mineral with grade below Medium-Grade Stockpile and above a cut-off grade of 0.18% CuEq for
the 55 ktpd and 110 ktpd cases (0.15% CuEq for the 200 ktpd case)
The following table summarizes the material moved for each case, including miil feed, waste and the re-handling of stockpiles.
Table 7
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Capital Cost Estimate
Capital cost estimates are comprised of the following:
Direct cost of construction and assembly: Acquisition and supply of equipment, labour, auxiliary equipment for construction
and building materials were included.
Indirect costs of project: Transportation and insurance of equipment, general spare parts, vendor's representatives,
detailed engineering, EPCM, start up and owner costs were considered.
Contingency estimation based on Direct Cost, plus Indirect Cost.
Sustaining capital is defined as that required to maintain operations and may include capital spent on expansion or new
infrastructure items.
Deferred capital is investment required to complete an expansion in the mine facilities and process plant during the life of
the project.
After incorporating the recommended contingency, the capital cost estimate is considered to have a level of accuracy of +/-35%.
The following table summarizes the initial, sustaining and deferred capital requirements of the Vizcachitas Project for the
different development cases.
Table 8:
Capital Cost Summary (Nominal values)
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Operating Cost Estimate
Operating costs have been estimated for the operating areas of Mining, Process Plant, Infrastructure and Administration. Costs
were reported under subheadings related to the function of each of the areas identified.
The operating cost estimates are based on long term power prices of US$ 45 /MWh and US$ 1.00 /l for diesel fuel.
Based on the assumption listed in the PEA, the operating costs are considered to have an accuracy of ± 35%t. All unitary
operating costs are expressed in processed tonnes.
The following tables summarize the average unit operating cost by area for the first 8 years of operation and for the Life-of-Mine
(LOM).
Table 9:
Unit Operating Costs (USD/t plant feed; Nominal values, average first 8 years)
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(*) Mine costs include the strip ratio for the first 8 years of operation
Table 10:
Unit Operating Costs (USD/t plant feed; Nominal values, LOM)
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(*) Mine costs include the strip ratio for the LOM
Mining Operating Cost:
Mine operating costs are based on owner mining and cover the following:
Pit operations, drilling, blasting, loading, and hauling
Construction and maintenance of mine haul roads, sumps, and safety berms
Operating and maintenance labour
Mine department supervision and technical services
Crushing waste rock to supply aggregate for road surfacing and blast-hole stemming and other earthworks as may be
required for day-to-day mining operations
Table 11:
Mine Unit Operating Costs (US$/t) by Expense Item (Nominal values, for material moved)
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Process Plant Operating Cost:
Process plant operating costs were developed covering the following unitary operations:
Primary crushing and stockpiling
Grinding
Copper-molybdenum bulk flotation
Molybdenum flotation
Thickening of concentrates and tails
Filtering
Concentrates handling
Table 12:
Process Plant Operating Cost (USD/t plant feed) by Expense Item (Nominal values)
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Infrastructure and Administration Cost:
Infrastructure operating costs were developed considering the following areas:
Tailings storage facility
Tailings transport
Water supply
Power supply
Administration buildings
Others
For all cases an Infrastructure cost of 0.2 USD/t was assumed, which includes labour, energy, materials, spare parts and third-
party services.
Administration costs include general administration of the Company. Administration cost is estimated at 0.2 USD/t.
C-1 Cash Costs:
Table 13:
Average First 8 Year Cash Costs
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Table 14:
Average Life of Mine Cash Costs
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The Technical Report is authored by independent Qualified Persons and prepared in accordance with NI 43-101. The contents
of this press release have been approved by the following independent Qualified Persons:
Severino Modena, Tetra Tech, Member of Chilean Mining Commission
José Luis Fuenzalida, Tetra Tech, Member of Chilean Mining Commission
Mario Riveros, Tetra Tech, Member of Chilean Mining Commission
Antony J. Amberg, M.Sc., C.Geol., a qualified person as defined by National Instrument 43-101, supervised the preparation of
the technical information in this news release.
For more information please contact:
Antony J. Amberg, CEO - Chief Geologist
Tel:
+56 2 2954-0450
Aurora Davidson, CFO
Tel:
604-697-6207
E-Mail:
or visit our website at:
www.losandescopper.com
About Los Andes Copper Ltd.
Los Andes Copper Ltd. is a Canadian company focused on the development of the Vizcachitas Project in Chile. Vizcachitas is
one of the largest, advanced copper projects in the Americas not held by a major mining company.
Los Andes Copper Ltd. is listed on the TSX-V under the ticker: LA.
Certain of the information and statements contained herein that are not historical facts, constitute "forward-looking
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(Alberta) ("Forward-Looking Information").
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Looking Information involves known and unknown risks, uncertainties and other factors which may cause the actual results,