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Oroco Resource (TSXV: OCO) has put out a preliminary economic assessment (PEA) as well as updated mineral resource estimate for the North and South zones of its Santo Tomas porphyry copper project in Sinaloa, Mexico.
The PEA results support a staged open pit mine and processing plant starting at 60,000 tonnes per day in the first year of production, then expanding to 120,000 tonnes per day in the second year. Production is preceded by two years of construction and pre-stripping.
Over an approximate 20-year mine life, the Santo Tomas project would have total payable copper production (in concentrate) of 4.8 billion lb., plus byproducts totalling 82.6 million lb. of molybdenum, 26.3 million oz. of silver and 331,900 oz. of gold.
The study gives the Santo Tomas project an after-tax net present value of $1.2 billion at an 8% discount and an internal rate of return of 17.3%. The after-tax payback is five years from first concentrate production.
The initial capital costs are estimated at $1.3 billion, while sustaining and expansion capital costs are pegged at $1.1 billion. Its average annual LOM cash cost is calculated at $1.66 per lb. copper on byproduct basis.
“This is a significant start to the process of evaluating Santo Tomas. The PEA firmly demonstrates the economic viability of the Santo Tomas project and justifies its continued development,” Oroco’s CEO Richard Lock stated in a press release.
The Santo Tomas property comprises 90.3 sq. km of mineral concessions encompassing significant porphyry copper mineralization in northern Sinaloa and southwest Chihuahua. Oroco holds an 85.5% interest in the 11.7 sq. km that comprise the central concessions, plus an 80% interest in the remaining 78.6 sq. km that surround this core area.
The PEA was based on data from more than 43,000 metres of drilling by Oroco as well as over 21,000 metres of legacy drilling in the North and South zones. The results culminated in the project’s updated mineral resource, totalling 561 million indicated tonnes at 0.37% copper-equivalent and 549 million inferred tonnes at 0.34% copper-equivalent.
According to Lock, the company has also identified a high probability of additional upside in project economics through the future application of mine and process design improvements, all of which confirm that there is a “substantial resource at Santo Tomas.”
“In summary, the Santo Tomas project clearly has robust potential for the development of a large, low-cost open-pit, copper mining operation,” he concluded.
Shares of Oroco Resource jumped by 9.1% by 12:30 p.m. in Toronto on Tuesday. The Vancouver-based explorer has a market capitalization of C$155.1 million.
