IM 2019 August 19 | Page 5

THE LEADER VO LU M E 1 4 • N U M B E R 8 Pooling assets Editorial Director Paul Moore B.Sc (Hons), M.Sc. Email: [email protected] Editor Daniel Gleeson BA (Hons) Email: [email protected] Editorial Board Professor Malcolm Scoble Robert E. Hallbauer Chair in Mining Engineering., University of BC, Vancouver Peter Knights Mining Professor Stephen Stone West One Management Perth, Western Australia Dr. Andrew M. Robertson President, Robertson GeoConsultants Vancouver, Canada. Ed McCord Project Consultant Caterpillar Global Mining, USA Jason Nitz Fleet Management & Dispatch Superintendent Newmont Mining Corporation, USA Dr Terry Mudder Managing Director, TIMES Ltd, USA Simon Tarbutt Consultant, Santiago, Chile Dr. Mike Daniel Comminution Process Consultant CMD Consulting Pty Ltd Advertising Sales: Phil Playle Email: [email protected] [phone] Publishing Assistant Lynne Lane Email: [email protected] Accounts Manager Nicola Shukla [email protected] Marketing Assistant Joanna English BA (Hons) [email protected] Circulation Assistant Jane Alter [email protected] Design and Production Trevor Sheldon Email: [email protected] Website: www.im-mining.com Annual Subscription Enquiries Emma Smith [email protected] Annual Subscription UK and Europe £160, €230 Rest of the world US$270 International Mining (ISSN No: 1747-146X) is published monthly by Team Publishing Ltd, GBR and is distributed in the USA by Asendia USA, 17B South Middlesex Avenue, Monroe NJ 08831 and additional mailing offices. Periodicals postage paid at New Brunswick NJ. POSTMASTER: send address changes to International Mining, 17B South Middlesex Avenue, Monroe NJ 08831 Founding Fathers John Chadwick B.Sc. Min Eng David Lansdowne Bob Warren Printed by The Manson Group, St Albans © Team Publishing Ltd 2019 ISSN 1747 -146X IM uses, as preference, SI units throughout, so, for example, all tonnes are metric unless otherwise stated. All dollars are US unless otherwise stated W ith new mines, the distinction between greenfield and brownfield is not always clear cut – if it is possible to use the assets and infrastructure of a relatively nearby existing operation, and ideally one that is winding down, it can mean big upfront savings in development, a significantly lower financial risk early on in the project and a lesser environmental impact. A plan to incorporate infrastructure from Glencore, Newmont Goldcorp and Yamana Gold’s jointly owned Alumbrera copper-gold operation, in Argentina, into the Agua Rica copper-gold project looks like paying off after a prefeasibility study (PFS) on the project highlighted an increase in annual output over the mine’s first 10 years and lower operating costs. The three companies, in March, signed a definitive integration plan, which contemplated the development and operation of the Agua Rica project using the infrastructure and facilities of Minera Alumbrera, which saw open-pit mining conclude in 2018. This pact, they said, would realise important synergies, lowering initial capital required, and reducing the environmental footprint. As part of the deal, Agua Rica would be jointly owned by the three parties, with Yamana owning 56.25%, Glencore holding 25% and Newmont Goldcorp holding the remaining 18.75%. Yamana said: “The integration plan generates significant synergies and lowers execution risk by bringing together the extensive mineral resource of Agua Rica with the existing infrastructure of Alumbrera to create a unique, high quality, and low risk brownfield project that the parties believe will bring significant value to shareholders and local communities and stakeholders. “This unique and innovative project will serve to position Catamarca as a focal point for development in northwestern Argentina.” Based on mineral reserves updated as at June 30, 2019, the PFS estimates a mine life of 28 years with average annual production over the first 10 years of around 533 MIb (241,765 t) of copper equivalent, including 107,000 oz of gold and contributions of molybdenum and silver. Average cash costs over this period were estimated at $1.29/Ib, with all-in sustaining costs coming in at $1.52/Ib. Yamana said the initial capital cost estimate of $2.4 billion realises “significant synergies from using the infrastructure and facilities of Alumbrera”, with the project expected to generate an after-tax NPV (8% discount rate) of $1.935 billion based on a copper price of $3.00/Ib. Opportunities to further improve the economics will be evaluated in a value-seeking study, scheduled for this year, and the full feasibility study, expected by 2020, Yamana said. The PFS assumes a throughput rate of 110,000 t/d with scenarios considering a higher throughput rate to be evaluated in the value- seeking study and subsequent full feasibility study. “Preliminary evaluations have indicated the potential for significant upside to the project economics from increases to throughput with existing mineral reserves to 115,000 t/d, which would improve NPV to over $145 million and require only a marginal increase to initial capital,” the company said. The PFS for the integrated project considers the Agua Rica deposit to be mined via a conventional high tonnage truck and shovel open-pit operation. Average life of mine material moved is expected to be approximately 108 Mt/y, with ore feed of 40 Mt/y and average life of mine strip ratio of 1.66. Ore extracted from the mine will be transported from the open pit by truck to the primary crusher area and then transported via a conventional conveyor to the existing Alumbrera processing plant. To route the overland conveyor system, approximately 5.2 km of tunnel development will be required. The conveyor extends 35 km to the Alumbrera process plant, where it will feed the existing stacker conveyor via a new transfer station. Relatively modest modifications to the circuit are needed to process the Agua Rica ore in order to produce copper and by-products concentrate, according to Yamana, which will then be transported to the port for commercialisation. An in-situ blending strategy has been defined to manage the concentrate quality over certain years of the mine life, which will allow the project to achieve the desired targets, the company explained. The high quality and well-preserved existing infrastructure of Alumbrera is fully used in the planned integration, Yamana said. Tailings storage facility, power supply, water supply, ancillary buildings, and logistical installations, among other infrastructure, are all included. “This significantly reduces the environmental footprint of the project,” Yamana said. Given the level of progress achieved in the PFS, the parties have begun the process to prepare the Environmental Impact Assessment for the integrated project, as well as continuing engagement with local stakeholders and local communities, Yamana said. With increasing scrutiny on new mining projects globally for a number of reasons, not least some high profile tailings dam and pit wall failures, the ability to reduce the footprint of new projects by using existing infrastructure where possible, even if it involves different owners and new tie-ups and joint ventures, looks set to be an important strategy going forward. Paul Moore Editorial Director [email protected] AUGUST 2019 | International Mining 3