Chinalco could invest $426 million in Suriname bauxite project
If approved by parliament, Chinalco could begin construction by the middle of next year.
Australia-based Hot Chili (ASX: HCH; TSXV: HCH) is planning to build a major, low capital density copper-gold mine – Costa Fuego in the Atacama Desert of Chile. The property is about 600 km north of Santiago at an elevation of less than 1,000 metres. Hot Chili holds a 90% interest in the property, through its Chilean subsidiaries.
According to the preliminary economic assessment (PEA), the post-tax net present value (8% discount) will be $1.1 billion, and the post-tax internal rate of return will be 21%. The base case uses prices of $3.95/lb. copper and $1,750/oz. gold.
The company says the project will have “one of the lowest capital intensities of global copper development projects.” It will still require a pre-production capital outlay of almost $1.1 billion to put together a project with a 16-year life.
Average annual production will be 209,000 lb. copper and 49,000 oz. gold. The project is expected to produce total revenue of $13.5 billion and total free cash flow of $3.28 billion (post-tax, after operating costs, capital costs, and royalties).
Costa Fuego has a total measured and indicated resource of 725 million tonnes grading 0.38% copper, 0.11 g/t gold, 0.45 g/t silver, and 93 ppm molybdenum (0.47% copper-equivalent). In terms of contained metals, that is over 6.0 billion lb. of copper and 2.6 million oz. of gold (7.5 billion lb. copper-equivalent). About 80% of these resources can be mined as an open pit and the remainder as an underground mine.
The total inferred resource is 202 million tonnes at 0.30% copper and 0.06 g/t gold (0.36% copper-equivalent).
Hot Chili has an ambitious timeline for Costa Fuego. The prefeasibility study is due by the end of 2024, then the resources will be upgraded, and the definitive feasibility study is due in the first half of 2026, followed by the decision to finance and develop the project by the end that year.
Once the financing is in place, construction of the open pit mine and mill will take two years to complete. Underground block cave development will begin in year five and take about three years. Further out are plans to leach low-grade sulphide ore.
The project has expansion potential. To outline it, the company has embarked on a 30,000-metre drill program.
Earlier today (June 28), Hot Chili said it has signed a binding $15 million agreement with Osisko Gold Royalties for a 1.0% net smelter return (NSR) royalty across the Costa Fuego project.
