GROWTH PROJECTS & OPPORTUNITIES

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.

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

This phase is designed to optimise throughput within the limits of the existing operating, environmental and water extraction permits. Construction started in early 2019 and by the end of the year the project progress to completion was 31%.

Throughput at the plant will increase from the current capacity of 175,000 tonnes of ore per day to an average of 190,000 tonnes of ore per day and first production is expected by the end of 2021. The plant expansion includes an additional SAG mill, ball mill and the corresponding flotation circuit with six additional cells.

Annual copper production will be increased 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 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 capital cost of the project is $1.3 billion, which includes $500 million for a 400-litres per second desalination plant and water pipeline. The desalination plant will supply water for the expansion and will act as a back-up for the existing operation in dry conditions such as those the region has been experiencing recently. Desalinated water will be pumped from the coast to the Mauro tailings storage facility, where it will connect with the existing recycling circuit returning water to the Los Pelambres concentrator plant.

Phase 2

In the second phase of expansion, throughput will increase to 205,000 tonnes of ore per day increasing copper production by 35,000 tonnes per year. 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 6 billion tonne mineral resources base.

Work began on the environmental baseline study for the new EIA in 2017, 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, the majority of the expenditure being spent on mining equipment and increasing the capacity of the concentrator and the Mauro tailings facilities. The conveyors from the primary crusher in the pit to the concentrator plant will also have to be repowered to support the additional throughput.

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, 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 completion of the feasibility study and review for Phase 1 is expected to be completed during 2020. 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 deposit, water pipeline and other infrastructure, plus the owner’s and other costs. The optimised feasibility study will update these estimates as well as including an evaluation of the potential disposal of Centinela’s existing water infrastructure and the evaluation of a new milling and crushing strategy using high pressure rolls rather than the more traditional SAG mills. In addition, a third party may be invited to provide water to the site and build the new pipeline.

The Board has approved a project to open the Esperanza Sur pit at Centinela. Esperanza Sur 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, 0.13 g/t of gold and 0.012% of molybdenum.

Stripping is expected to start in 2020 and to be completed by the end of 2021 at a capital cost of $175 million. The stripping will be capitalised and will be carried out by a contractor. The Company is currently evaluating whether to use autonomous mining equipment once the stripping is completed. 

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.

The Board approved the Zaldívar Chloride Leach project during the second half of 2019.

The project is expected 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. Work will begin early in 2020 and the first full year of production is expected to be 2022.

The project requires an upgrade of the Solvent Extraction (SX) plant and the construction of additional washing ponds at an estimated capital cost of $190 million.

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

In December 2019, Twin Metals Minnesota presented its Mine Plan of Operations (MPO), a prerequisite for permitting applications, to the US Bureau of Land Management 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. The review process will include additional baseline data collection, impact analyses, and multiple opportunities for public input, and is expected to take some five years.

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 PGM deposits in north-eastern Minnesota, US. In 2018 an update of the pre-feasibility study was completed on an 18,000 tonnes of ore per day project producing an average of 42,000 tonnes of copper per year plus nickel and PGM as by-products, the equivalent of some 65,000 tonnes of copper per year.

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