Los Andes Updates Vizcachitas PEA with US$1.8 Billion NPV

Los Andes Copper (TSXV:LA) has released an updated preliminary economic assessment (PEA) for its Vizcachitas copper-molybdenum project in Chile, putting its mine life at 45 years.

The project itself will feature an open pit mine and concentrator plant that produces copper and molybdenum concentrates, with the PEA weighing three separate cases that feature different mill throughputs. Of the three considered, the company has recommended that the 110,000 tonne per day (tpd) case be advanced into prefeasibility.

According to the company, this case hosts the best economic results and optimizes the mining and technical aspects for a mineral deposit as big as Vizcachitas. Under this scenario that asset would have a net present value of US$1.8 billion, an internal rate of return of 20.77 percent and a payback period of 3.4 years from initial operations.

“The strong economic viability of the project … indicates that not only is it financially robust but it also has the ability to generate positive cash flows in a short period of time. Additionally, the C1 cash costs of US$1.36/lb for first 8 years of operation put us well within the second quartile of copper producers and supports a resilient cash flow generation through copper price cycles,” Los Andes Executive Chairman Fernando Porcile said in a statement.

The company last released a PEA for the asset in 2014, and this week’s fresh assessment adds some notable updates. For one thing, Chile’s power market has improved, allowing long-term prices to decrease from US$120 per megawatt-hour (MWh) to US$45 per MWh.

Additionally, Vizcachitas’ resources have been increased significantly and include measured resources for 46 percent of the projected mill feed for the first 10 years of operations.

The project’s current measured and indicated resource sits at 1.284 billion tonnes at a copper equivalent grade of 0.45 percent. According to Porcile, should the asset use the 110,000 tpd production case as previously mentioned, only half of the resource will be depleted by the end of mine life.

Going forward, Vizcachitas will be advanced to the prefeasibility study stage with an expected completion date of Q4 2020.

As of Wednesday (June 5), copper was at US$5,832 per tonne on the London Metal Exchange. By 3:07 p.m. EST on Thursday (June 6), Los Andes shares were up 16.67 percent on the TSXV at C$0.35.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.