The capital cost estimates have been compiled with an accuracy level of -25% to +35%.
The initial capital cost estimate for the Project in the PEA compares favourably to the initial capital costs cited for comparable copper projects under development. The capital intensity ratio on initial capital (initial capital divided by average annual copper production) is a measure of the amount of investment in initial capital infrastructure required to produce a tonne of copper at a project. The Project's capital intensity ratio on initial capital is estimated to be $11,090/tonne of copper production (for production prior to the expansion in year eight). The term "capital intensity ratio" does not have a standard meaning and may not be directly comparable to capital intensity ratios presented by other issuers.
Operating Cost Estimates
The PEA estimates that the C-1 cash costs (net of by-product credits) over the life of the mine will average $1.11/lb copper sold. C-1 cash costs include at-mine cash operating costs, treatment and refining charges, royalties, mine reclamation and closure costs, and copper and molybdenum concentrate transportation and freight costs.
The following LOM operating costs have been forecast for the Project:
----------------------------------------------------------------------------Site Operating Costs (per tonne of mineralized material mined and fed to the concentrator)---------------------------------------------------------------------------- Mining $4.67---------------------------------------------------------------------------- Processing $4.26---------------------------------------------------------------------------- Infrastructure Maintenance $0.06---------------------------------------------------------------------------- Railroad Operations $0.19---------------------------------------------------------------------------- General & Administration $0.57---------------------------------------------------------------------------- Mine Closure Costs $0.02----------------------------------------------------------------------------Total Site Operating Costs ($/tonne mineralizedmaterial mined and fed to the concentrator) $9.77----------------------------------------------------------------------------Other Key Costs---------------------------------------------------------------------------- Copper Concentrate Treatment Charges $70/dmt Cu concentrate---------------------------------------------------------------------------- Copper Refining Charges $0.07/lb Cu---------------------------------------------------------------------------- Ocean Freight, Port handling & Other Costs $79.67/wmt Cu concentrate----------------------------------------------------------------------------
Infrastructure
While the Project is located in a remote area of Argentina, it benefits from substantial regional infrastructure. The Project is located within ten kilometers of the railway line that connects Salta with the port city of Antofagasta in Chile. This rail infrastructure will be used to transport concentrates and select consumables to and from the port of Mejillones, 60 kilometers to the north of Antofagasta and other consumables from within Argentina. The Mejillones port has completed the design for, and plans to develop, the required infrastructure to handle the transfer of copper concentrates from rail cars to ships.
