Capstone Copper (TSX: CS) (ASX: CSC) has released a new feasibility study (FS) for its 100%-owned, fully permitted Santo Domingo copper-iron-gold project in Chile following further technical and optimization work.
The FS highlighted improved economics compared to the one released in 2020, including an after-tax net present value (at 8% discount rate) of $1.7 billion (versus $1.3 billion previously) and a higher internal rate of return at 24.1%.
Over the project’s 19-year mine life, production is expected to average 68,000 tonnes of copper and 3.6 million tonnes of iron concentrate, at first quartile cash costs of $0.33/lb. of payable copper. Previously, the mine life was one year shorter with lower annual copper production at 62,000 tonnes.
During the first seven years, production at Santo Domingo is expected to average 106,000 tonnes of copper and 3.7 million tonnes of iron concentrate at even lower cash costs of $0.28/lb., compared with $0.61/lb. before.
The initial capital cost of $2.3 billion is expected to drive a capital intensity of approximately $21,900 per tonne of annual copper equivalent production over the life of mine, Capstone said. Payback period for the capital is estimated at three years.
“The 2024 feasibility study significantly enhances the mine’s economics backed by low capital intensity and first quartile costs,” John MacKenzie, Capstone’s chief executive officer, stated in a news release.
“A construction decision and the integration of Santo Domingo represents the next phase of our transformational growth as we become a leading long-life and low-cost producer of critical metals essential for the world’s decarbonization efforts.”
Capstone said the updated FS for the Santo Domingo project marks a major step towards the creation of a world-class district in the Atacama region of Chile. The proposed mine, which will comprise two open pits, is located 35 km northeast of the company’s 70%-owned Mantoverde mine.
In late 2022, the company announced an integration plan for the two mines, from which it is targeting over 200,000 tonnes of annual low-cost copper production, amounting to $80-$100 million of savings per year.
This year, the Mantoverde mine is expected ramp up its production from approximately 35,000 tonnes annually to a run rate of 120,000 tonnes of copper a year by including the processing of sulphide material. Recently, the expanded Mantoverde project produced its first saleable copper concentrate.
“Having recently completed construction at our Mantoverde development project, we have an experienced mine-build team which today is rare in our industry,” Cashel Meagher, president and COO, said. “The feasibility study for Santo Domingo outlines an actionable investment opportunity with an attractive rate of return and a short payback period.”
“Over time, we plan to further augment these base case numbers with additional opportunities, including unlocking cobalt production in the district, processing Santo Domingo’s oxides at Mantoverde, and continuing to explore the district to improve our understanding of the longer-term potential,” he added.
