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Ivanhoe Electric (TSX: IE) has released the results of an initial assessment (IA) analyzing the potential for an underground copper mine at its Santa Cruz project located west of Casa Grande, Arizona, powered predominantly by renewable energy.
The IA, which is preliminary in nature, envisions a 5.9-million-tonne-per-year copper mining operation with an estimated 20-year life. Life of mine (LOM) copper production is calculated at 1.6 million tonnes with average grade of 1.58% total copper (1 million tonnes will be in the form of 99% pure copper cathode, the rest being copper contained in a 48% copper concentrate).
The study focuses exclusively on the high-grade exotic, oxide and enriched domains of the Santa Cruz and East Ridge deposits, with combined resources of 2.7 million tonnes indicated grading 1.42% total copper and 27.3 million tonnes inferred grading 1.39% total copper.
However, there is potential for resource upgrades from the oxide domains of the Texaco deposit (900,000 tonnes indicated grading 1.05% total copper and 35 million tonnes inferred grading 1.06% total copper), and from the large primary sulfide domains at Santa Cruz (76.2 million tonnes indicated grading 0.88% total copper and 8 million tonnes inferred grading 0.92% total copper).
Copper recoveries of 95.4% are expected to be achieved through a combination of solvent extraction and electrowinning (SX/EW) and conventional froth flotation, as outlined by the IA.
On the project economics side, the IA projects Santa Cruz to have an after-tax net present value of $1.3 billion with an after-tax internal rate of return of 23%, using an 8% discount rate and an LOM copper price of $3.80/lb.
The study also estimates initial project capital expenditures of $1.15 billion and LOM sustaining capital expenditures of $980 million. A three-year construction period is contemplated to develop the underground workings and build the surface processing facilities.
Ivanhoe noted that the IA is designed to minimize environmental impact and minimize surface land disruption. As a result of the small surface footprint required for mining activities, the area expected to be required for the project would cover approximately one-third of the total land package, it says.
As a primarily “green” copper mine operation, the IA base case assumes 70% of the total electric power requirements for the project will be generated by onsite renewable infrastructure, enabling copper production with low carbon dioxide equivalent (CO2e) emissions (0.49 tonnes per tonne of copper produced for Scope 1 and 2 emissions). In comparison, the global mining industry average is approximately 3.9 tonnes of CO2e, Ivanhoe said.
Robert Friedland, executive chairman of Ivanhoe, says completion of the IA for the Santa Cruz copper project is an “important achievement” for the company as it works to advance a new source of responsibly produced ‘green’ copper in the United States.
“Our goal is to develop a modern copper mine that produces copper with among the lowest levels of carbon dioxide output in the industry; a product we think has the potential to attract a premium price in the future,” Friedland said in Wednesday’s news release.
“We believe the Santa Cruz copper project will become an industry-leading example of responsibly produced copper in the United States, and a source of high-quality jobs in Arizona during development and throughout its anticipated long mine life,” CEO Taylor Melvin added.
Shares of Ivanhoe Electric gained 1.1% by 12:50 p.m. EDT, giving the company a market capitalization of C$2.2 billion ($1.6 billion).
