GROWTH PROJECTS & OPPORTUNITIES

Our approach to considered growth means we focus on value, which includes controlling capital costs and optimising production at our existing operations and the development of new mining operations to deliver replacement and new production in the future.

Our approach to considered growth means that we focus on everything from controlling capital costs and optimising production at our existing operations to the development of new mining operations.

We achieve this through careful project management and constant monitoring of the efficiency of our mines, plants and transport infrastructure.

This expansion project is divided into two phases.

Phase 1

Phase 1 of the expansion is designed to increase the current throughput capacity of Los Pelambres from 175,000 tonnes of ore per day to an average of 190,000 tonnes of ore per day and to provide desalinated water to the operation. The desalination plant will initially produce 400 litres per second of water, but to reduce the risk to water availability the original design will be expanded to 800 litres per second once the necessary additional environmental approvals have been obtained.

The future capacity increase from 400 to 800 litres per second will be a separate project to the Los Pelambres Expansion project and is expected to be approved once the additional necessary environmental permits have been received. In the meantime, additional pumping capacity and other infrastructure will be installed as part of Phase 1 to improve the overall capital efficiency and execution time of the two stages of the capacity increase.

Phase 1 of the project will increase annual copper production by an average of 60,000 tonnes per year over 15 years, starting at approximately 40,000 tonnes per year for the first four to five years and growing to 70,000 tonnes for the rest of the period as the hardness of the ore increases and the benefit of higher milling capacity is fully realised.

The project is expected to be completed in 2022.

Phase 2

In the second phase of the expansion, throughput will be further optimised. As part of this development the Group will submit a new EIA to increase the capacity of the Mauro tailings storage facility and the mine waste dumps, as well as extend certain operating permits. The granting of these permits will extend the mine’s life by 15 years beyond the current 15 years, accessing a larger portion of Los Pelambres’s six billion tonne mineral resources base.

Work has begun on the environmental baseline study for the new EIA, along with the early stages of community engagement activities. Critical studies on tailings and waste storage capacity have been undertaken and are now progressing towards the feasibility study stage.

Capital expenditure for this phase was estimated in the pre-feasibility study in 2014 at approximately $500 million.

We are currently evaluating the construction of a second concentrator and tailings deposit some 7 km from the existing concentrator in two phases. Phase 1 would have an ore throughput capacity of approximately 90,000 tonnes per day, producing copper, and gold and molybdenum as by-products, with an annual production of approximately 180,000 tonnes of copper equivalent. Once Phase 1 has been completed and is operating successfully, a further expansion is possible and would involve increasing the capacity of the concentrator to 150,000 tonnes of ore per day with annual production increasing to 250,000 tonnes of copper equivalent, maximising the potential of Centinela’s large resource base.

Ore for the second concentrator would be sourced initially from the Esperanza Sur deposit and later from Encuentro Sulphides. The latter lies under the Encuentro Oxides reserves, which are expected to be depleted by 2026.

The EIA for both phases of the project was approved in 2016 and the initial feasibility study for Phase 1 was completed during 2020 with further detailed and supplier engineering progressing during 2021 ahead of an expected decision by the Board in H1 2022. The capital cost estimated in the 2015 pre-feasibility study for Phase 1 was $2.7 billion, which included capitalised stripping, mining equipment, a concentrator plant, a new tailings storage facility, a water pipeline and other infrastructure, plus the owner’s and other costs.

In late 2020 a tender process was started to invite third parties to provide water for Centinela’s current operations, by acquiring the existing water supply system, and building the new water pipeline. It is expected this process will be completed during 2021.

Esperanza Sur pit is 4 km south of the Esperanza pit and is close to Centinela’s concentrator plant. The deposit contains 1.4 billion tonnes of reserves with a grade of 0.4% copper, 0.13g/t of gold and 0.012% of molybdenum. The capital cost estimate for the project is unchanged at $175 million and is expected to be completed in the first half of 2022.

Opening the Esperanza Sur pit will improve Centinela’s flexibility to supply its concentrator and the higher-grade material, over the initial years, will increase production by some 10–15,000 tonnes of copper per year, compared to how much would be produced if material was solely supplied from the Esperanza pit. This greater flexibility will allow Centinela to smooth and optimise its year-on-year production profile, which has in the past been variable.

Zaldívar Chloride Leach project includes an upgrade of the Solvent Extraction (SX) plant and the construction of additional washing ponds to increase copper recoveries by approximately 10 percentage points with further upside in recoveries possible, depending on the type of ore being processed. This will increase production at Zaldívar by approximately 10–15,000 tonnes per annum of copper over the remaining life of the mine.

As the Group equity accounts its interest in Zaldívar, capital expenditure at the operation is not included in Group total capital expenditure amounts.

In late 2019, Twin Metals Minnesota presented its Mine Plan of Operations (MPO) to the US Bureau of Land Management (BLM) and a Scoping Environmental Assessment Worksheet Data Submittal was also issued to the Minnesota Department of Natural Resources. These submissions start a multi-year scoping and environmental review process that will thoroughly evaluate the proposed project.

In June 2020, the BLM issued its Notice of Intent (NOI) to begin its environmental review, a process that is likely to take several years. The review process will include additional baseline data collection, impact analyses and multiple opportunities for public input. Permitting for the project will follow the environmental review.

Twin Metals Minnesota is a wholly owned copper, nickel and platinum group metals (PGM) underground mining project, which holds the Maturi, Maturi Southwest, Birch Lake and Spruce Road copper, nickel, cobalt-PGM deposits in north-eastern Minnesota, US. The MPO design is based on mining and processing 18,000 tonnes of ore per day for 25 years. The concentrator will produce three saleable concentrates - copper, nickel and cobalt/PGM.

Twin Metals Website