Sierra Gorda Project
| Location: | District II, Northern Chile |
| Ownership: | 100% |
| Type of Ore body: | Copper oxide; copper, molybdenum and gold porphyry |
| Primary Metal: | Copper |
| Secondary Metals: | Molybdenum, gold |
| Processing: | Potential heap leach and primary sulphide production |
| Infrastructure | Accessible by road, rail, 140 km from the port Antofagasta |
Sierra Gorda is a late-stage copper exploration project located in the Atacama Desert, Region II of Chile with recent results indicating the potential for a large porphyry deposit.
The project comprises a land package that was consolidated for the first time by the Company in 2004 and is in an area that contains a number of significant copper mines and resources including BHP Billiton's Spence project 10 km to the northeast and the El Tesoro mine approximately 15 km to the southeast. The property consists of eight contiguous properties that cover an area of approximately 23 km2.
The Company previously had a number of options to acquire the interest in the Sierra Gorda project and recently agreed to accelerate payments totalling $22.5 million to exercise the core eight of such options. As a result the Company now has a 100% ownership in the project.
History and Recent Developments:
The Sierra Gorda property has been explored by numerous companies who defined modest molybdenum and copper, breccia-controlled, stockwork mineralization. In 2005 the Company produced a NI 43-101 Technical Report which defined 5 billion pounds of copper equivalent in the indicated and inferred categories. In 2006, drill hole QSG06-281 changed the perspective of the property by intersecting long intervals of significant copper, gold and minor molybdenum mineralization. This drill hole initiated a large exploration program resulting in the substantial resource and a recently filed scoping study including a preliminary economic assessment and an updated 43-101 compliant mineral resource.
Scoping Study:
The study supports an open pit and concentrator operation processing 111,000 tonnes of mill feed per day and producing between 250 and 400 million pounds of copper per annum over a 25 year mine life at an average cash cost of $0.79 per pound. The project would also have significant molybdenum production, averaging 33 million pounds per year over the first eight years, and declining thereafter. This high level of molybdenum production results in an average cash cost of $0.34 per pound produced during these first eight years. Using a long term copper price of US $2.00 per pound, molybdenum price of US $12 per pound and gold price of US $800 per ounce, the project produces an after-tax net present value (10% discount rate) of US $622 million and an internal rate of return of 16%.
Based on the preliminary economic assessment and engineering studies, the Sierra Gorda deposit contains approximately one billion total tonnes of sulphide mill feed, representing approximately 74% of total measured and indicated sulphide resources.
The NI 43-101 Technical Report dated July 23, 2009 the project has a measured and indicted mineral sulphide resource estimate of 12.5 billion pounds of copper and 742 million pounds of molybdenum and an additional inferred mineral sulphide resource of 3.8 billion pounds of copper and 122 million pounds of molybdenum. In addition, there are approximately 456 million tonnes of inferred resources. There are also significant oxide measured and indicated resources that were assumed to be waste for the purposes of this scoping study but will be subject to future economic study.
Life of Mine Statistics:
Mill Feed (measured & indicated) |
989 M tonnes |
Strip ratio |
2.5 to 1 |
Copper Grade |
0.42% Cu |
Molybdenum grade |
0.027% Mo |
Gold Grade |
0.069 g/t |
Copper recovery |
86% |
Molybdenum recovery |
59% |
Gold recovery |
42% |
Copper production |
306 M lbs/annum |
Molybdenum production |
16 M lbs/annum |
Gold production |
36,000 oz/annum |
Cash costs per pound Cu produced |
US$0.79 |
Capital costs |
US$1,661 M |
Sustaining Capital cost |
US$734 M |
Mine life |
25 Years |
|
|
Economics* |
|
NPV 8% |
US$983 M |
NPV 10% |
US$622 M |
NPV 12% |
US$355 M |
IRR |
16% |
The preliminary economic assessment is based on a number of technical, cost and other assumptions. These assumptions may be changed in the future as additional information becomes available. The scoping study assumptions are described in the full Technical Report which will be available for review on SEDAR at >www.sedar.com and on the Company's website at www.quadramining.com.
Acquisition of Water Rights:
On May 8, 2008 the Company acquired the permitted water rights to 319 litres per second ("lps") of water capacity located in Pampa Llalqui, Calama in Region II, northern Chile. As of the end of March 2008, Quadra had acquired the pumping rights to 129.5 lps of water from various sellers so now holds water rights totalling 475 lps. This represents a significant portion of the estimated overall water requirements for the project and its potential development, however as these water rights are not yet permitted, the scoping study assumes that the water required for Sierra Gorda will be supplied from seawater, a higher capital and operating cost alternative.
Health and Saftey
Sierra Gorda reached One Million Manhours without a Lost Time Accident on April 30, 2010.
Current Status & Outlook:
Based on the results of the scoping study, Quadra is advancing the project to pre-feasibility study at a cost of approximately $40 million excluding any land, water rights and mineral claim acquisition activities. SNC-Lavalin Group Inc. was selected to conduct the pre-feasibility study. That study is on schedule to be completed in December 2010.
It is expected that the EIS application will be submitted at the end of the first quarter of 2010. A historical review of other projects in Chile shows that this process has taken anywhere from 9 to 15 months to complete.
NI 43-101 Compliant Resource Estimate:
The Sierra Gorda resource estimate and associated work was prepared in compliance with requirements set out in National Instrument 43-101 by Steven Ristorcelli, R.P.G. Mine Development Associates ("MDA") of Reno, Nevada. The Sierra Gorda project preliminary assessment was conducted under the direction of Scott Hardy, Manager, Technical Services for Quadra Mining Ltd. The Sierra Gorda project metallurgical testwork and processing was conducted under the direction of David Newhook, Vice President, Project Evaluation for Quadra Mining Ltd. The Sierra Gorda project exploration work was conducted under the direction of Patrick Fahey, Vice President, Exploration for Quadra Mining Ltd.. Messrs. Ristorcelli, Hardy, Newhook and Fahey are the Qualified Persons for the project.
The Technical Report describing the estimate is available below as well as on SEDAR.
click to enlarge
Copper equivalent calculation is based on long term average copper, molybdenum, and gold metal prices to arrive at a ratio of 5 to 1 for molybdenum grades and 0.55 to 1 for gold grades. Copper equivalent calculations reflect gross metal content and have not been adjusted for metallurgical recoveries or relative processing and smelting costs.
For the 2009 Technical Report - Click here (26.3Mb)