5.2.5
Development Plans
Mining
The development plans for all three cases are presented in the following series of
tables. Cases 1, 2 and 3 all assume the same mine development sequence and the
delivery of 2.8 million tons per year (8000 tpd) to the concentrator. Table 5.2.5-1
illustrates the mine sequence. The rational for this sequence has been described
previously in section 2.2.6 of this volume.
Mine production will continue in the Tajo until 1998 when it will move to
Chabuca Sur. Open Pit production will continue through 2000 at Chabuca Sur.
Underground development for Chabuca Este and Coroccohuayco will begin in 1997
which will allow enough time for them to be in full production by year 2001. Mining
at a rate of 1.4 million tonnes annually form each of these deposits can continue
until 2008 based on current reserves. Coroccohuayco will have a few years ore still
available after this.
Mining from areas under and beside the current Tajo are not programmed into
this schedule.
Annual mine operating costs are shown in Table 5.2.5-2. They are based on the
following unit costs:
Surface Mining US$ 0.90 per tonne (increased to US$1.00 after 1996)
Chabuca Este
US$ 9.50 per tonne
Coroccohuayco
US$ 12.50 per tonne.
Mine operating costs will climb from the US$ 18 million forecast for 1994 to over
US$ 30 million by 2002. This cost is directly related to the movement from open pit
to underground mining. It is compensated by higher grade ore grades.
Significant expenditures will be necessary to develop the known mine reserves.
Table 5.2.5-3 shows the equipment and infrastructure costs associated with each
operation. Table 5.2.5-4 shows the mine development costs. Details have been
provided previously in section 2.2 of this volume.
The total anticipated equipment and infrastructure capital cost to allow mining
to continue over the next 15 years is US$ 119 million. Mine development costs are
forecast to be US$ 38 million over the same period. The combined total is US$ 157
million. The majority of this (US$ 137 million) will have to be spent between know
and 2000 to insure sufficient mill feed.
PAH has previously explained that optimization of mine planning and
consideration of open pit mining at Chabuca Sur may have a significant positive
impact on the amount and timing of capital expenditures. Further study is called
for and PAH strongly recommends that this be considered.
Case 1
Case 1 assumes a continuation of the current practice of custom smelting
concentrates. The concentrator production schedule is shown in Table 5.2.5-5.
Although mill feed is kept constant at 2.8 million tonnes annually, concentrate
production climbs from 164,410 tonnes in 1994 to 220,770 tonnes by 2002. This is a
direct function of the higher ore grades anticipated from Chabuca Este and
Coroccohuayco.
Concentrator operating and capital costs are shown in Table 5.2.5-6. Annual
operating costs are based on a unit cost of US$ 6.00 per tonne ore processed. Capital
costs are for sustaining capital and some plant modification with the exception of
new tailings capacity. A new investment of US$ 7.5 million will be required by the
year 2000 to insure adequate tailings capacity.
General, Administrative and Marketing expenses are shown in Table 5.2.5-7.
Annual G&A costs are fixed at US$3.5 million. Although these costs appear modest
in comparison to many operations it should be pointed out that Tintaya accounting
policy allocates certain G&A costs back to the mine and mill areas. This results in
those areas being slightly higher than might be expected. PAH has continued with
this policy in its cost estimation. Annual FSR costs are based on a unit cost of US$
0.33 per pound copper payable. This includes all inland freight, ocean going freight,
smelting and refining charges.
Table 5.2.5-8 presents a breakdown of unit operating costs on a US$ per pound
copper produced basis. Although there are minor variations the average operating
cost is US$ 0.68 per pound for the life of the current reserves. This figures do not
include capital amortization. Based on total anticipated capital expenditure of US$
173 million and production of 1.9 billion lbs (1994-2008) this would add another
US$0.09 to the cost.
Case 2
The second alternative development plan, Case 2, maintains concentrate
production as described but also includes recovery of copper form oxide resources.
This development of these resources has been discussed in section 5..1.5 of this
Volume. Table 5.2.5-9 presents anticipated oxide copper production as well as the
forecast production and investment costs.
Full scale production would begin in 1997 and continue through the life of the
project. Initial production would come from the existing high grade stockpiles.
However subsequent processing of lower grade materials would result in a drop of
production. There are potential but unquantified higher grade resources that could
be substituted for the low grade material in later years. Initial production is
expected to be 17,000 tonnes annually. This will continue for six years before
dropping off.
Total capital expenditures, including the operation of a pilot plant for two year, is
forecast to be approximately US$ 56 million. Annual operating costs of US$ 11.4
million is based on a unit cost of US$ 12.54 per tonne ore processed and US$ 0.43
per tonne material moved from the existing stockpiles. Cathode freight costs of US$
60 per tonne are additional to the operating costs.
Total unit costs per pound of copper produced would drop significantly in Case 2
(Table 5.2.5-10). Costs would drop to a low of US$ 0.55 per pound copper in the peak
years of oxide production. Although the average cost will climb in later years this
trend could be reversed by the identification of higher grade oxide resources.
Case 3
The construction of an on-site submerged combustion smelter combined with
sulfuric acid production and recovery of oxide copper is modeled for Case 3.
Concentrates will be treated on-site to produce blister copper which will be shipped
for refining. The smelter production schedule and costs are shown in Table 5.2.5-11.
This scenario results in the same total copper production as Case 2.
This case has the advantage of eliminating custom smelting charges and
lowering freight costs due to shipment of higher value added products. Also sulfuric
acid would be generated as a byproduct which can be used in the oxide recovery
process. This would eliminate the US$ 80 per tonne acid cost included in Case 2.
This advantages are partially offset by higher on-site operating cost (smelter costs).
Annual smelter operating costs vary between US$ 13.5 and US$ 17.5 million.
This is based on a unit cost of US$ 0.1231 per pond of copper in blister. Blister
refining charges are US$ 0.11 per pound payable copper. Blister freight charges are
estimated at US$ 60 per tonne. Based on a purity of 97.5 percent this translate into
US$ 0.028 per pound copper. The total FSR charges under Case 3 are therefore US$
0.26 per pound. This represents a reduction of US$ 0.07 from custom smelting.
Annual savings are approximately US$ 7-8 million depending on the volume of
copper produced.
The production cost of oxide copper will also drop under this scenario as acid is
generated as a by-product of smelting. This would eliminate the estimated US$ 80
per tonne cost for delivered acid. Copper oxide production costs would drop
substantially from the US$ 12.54 per tonne ore treated (Case 2) to US$ 6.99 per
tonne treated. This results in an annual saving of about US$ 5 million.
The cost savings will not come without a price. The estimated investment
expense is estimated to be US$ 64.4 million. PAH emphasizes that this Case is
conceptual and substantial investigation will be required before its feasibility is
proven.
Table 5.2.5-12 shows the total unit operating costs per pound of copper. During
best years this would be reduced to US$0.48/lb.