COPPER
Latin American Copper Frontiers
July 2017
Panama and Ecuador are all set to join the ranks of mined copper producers in 2018. In Panama, First Quantum is developing the 320ktpa Cobre mine and in Ecuador, a Chinese consortium is building the 95ktpa Mirador mine. Ecuador, in particular, is an emerging mining frontier with its copper and gold potential attracting substantial exploration and development investment.

Mines in Construction

First Quantum Minerals should begin production in 2018 from its 80%-owned Cobre Panamá open-pit mine located 20km from the Caribbean Sea coast in central Panamá. The other 20% interest is held by Korea Panama Mining Corporation (KPMC). Cobre Panamá is based on Proven and Probable Reserves totalling 3,183Mt at 0.38% copper and 0.07g/t gold. The relatively low-grade project will be large scale, producing 320ktpa of copper and 100kozpa of gold in concentrate during the first 25 years of production. The initial capital cost of US$5.48bn includes construction of a port facility and 300MW power plant. First Quantum reports that at the end of March 2017, overall project progress was estimated to be just over 50% complete and that spending to date was US$3.7bn. The project is scheduled for phased commissioning during 2018, with continued ramp-up over 2019.

Ecuacorriente, which is owned by Tongling Nonferrous Metals and China Railway Construction Company, commenced construction of the Mirador open-pit mine and 20Mtpa concentrator in southeast Ecuador in December 2015. Mirador will be Ecuador’s first large mining project. Output is expected to average 93ktpa of copper and 57kozpa of gold in concentrate.

There are also two gold projects under construction in Ecuador. Lundin Gold is developing Fruta del Norte as a 340kozpa of gold producer. Reserves total 15.5Mt at 9.7g/t of gold and 13g/t of silver. Development of underground portals commenced in May 2017. Initial capital cost is expected to be US$669m, with first gold pour in 2020. The second is Hong Kong-based Junefield Mineral Resources Holdings’ Rio Blanco gold-silver project where production is expected from late 2017. 

 

 

 

Exploration in Ecuador

Ecuador is emerging as an important destination for copper-gold exploration investment. SolGold’s Cascabel project highlights the prospectivity. The Ecuadorean Government is keen to promote a mining industry. Indeed, a mining ministry was created in 2015, changes to taxation arrangements have been made since 2014 and the granting of mining concessions is increasing. As within any jurisdiction there are risks. In Ecuador, these are illustrated in the history of community protest and government intervention at Llurimagua.

  • Llurimagua, formerly Junin, is an exploration stage, potentially large-scale, open-pit porphyry copper project in northwest Ecuador being assessed by an alliance between state-owned ENAMI and Chile's Codelco. ENAMI estimates there is an Inferred Resource of 318Mt at 0.7% copper and 0.016% molybdenum. In 2015, the alliance drilled 15,000m in 12 drill holes and a further 10,000m was drilled in 2016. Mitsubishi withdrew from this project in 1997 following community protests, and was replaced by Ascendant Copper (renamed Copper Mesa Mining Corporation). The Ministry of Mines and Petroleum terminated the concession in November 2008 based on the results of a Mining Mandate issued by the National Assembly. Over 4,000 mining concessions were affected with many being extinguished. Copper Mesa appealed the decision. In March 2016, a Tribunal of the Permanent Court of Arbitration in The Hague, Netherlands awarded Copper Mesa damages of US$19.48m due to Ecuador's expropriation of Copper Mesa's investments in the Junin and Chaucha projects. Damages had not been paid by March 2017.
  • The Cascabel project, owned by SolGold (85%) and Cornerstone Capital Resources (15%), is located 70km north of Llurimaga. Exploration drilling has returned very long intersections of moderate-grade copper-gold mineralisation at the Alpala prospect. Hole 12 intersected 1,312m at 0.67% copper and 0.63g/t gold. Hole 9 intersected 1,088m at 0.66% copper and 0.89g/t gold. There are a series of other copper-gold targets within the project area. No mineral resource estimate has been completed. Intensive diamond drilling is in progress with ten drill rigs expected to be operational by early 2018, targeting over 90,000m of drilling per annum. SolGold is planning metallurgical testing and completion of a prefeasibility study, investigating both high tonnage open cut and underground block caving operations, as well as a high grade, low tonnage initial underground development. In June 2017, Newcrest invested a further US$40m in SolGold following a US$41.2m capital raising by SolGold. The investment lifted Newcrest's interest in SolGold to 14.54%
  • Grupo Mexico’s Southern Copper obtained permits required to evaluate the Chaucha, or Ruta del Cobre, copper-molybdenum project in 2013. In 2014 to 2016, Southern Copper conducted diamond drilling totalling 20,000m to 25,000m each year. No resource estimate in known. This year, Southern Copper expects to conduct 12,000m of diamond drilling and to prepare a conceptual study for the project.
  • Salazar Resources is exploring its Curipamba project for volcanic hosted massive sulphide (VHMS) deposits. In 2013, the El Domo deposit was estimated to contain 10.0Mt at 2.0% copper, 2.7% zinc, 2.6g/t gold and 51g/t silver in Indicated and Inferred Resources. Salazar is conducting a 10,000m Phase V diamond drilling programme that is expected to be completed in the September Quarter of 2017.