Chile Spotlight - USD$2.4b Vizcachitas Copper Project

Chile has a project pipeline of around $65 billion with the majority being related to copper. Most analysts agree that copper demand will rise faster than supply but even with market conditions looking positive for years to come, most copper projects in Chile have not advanced as quickly as one would hope.

This was particularly true during the pandemic when many companies pushed drilling or delayed studies and permitting. One of reason was the pandemic but also there was uncertainty around proposed increases to royalties and the rejected constitutional vote that took place in 2022 that specifically affected Chilean projects.

Last week, Los Andes Copper released their prefeasibility study for its Vizcachitas project. It is a notable project to follow since it is one of the few greenfield projects to advance in Chile these last few years.

Below we have provided a summary of the project based on the prefeasibility study that we recently studied.

Vizcachitas?– Project Spotlight

• Vizcachitas is a large copper-molybdenum porphyry deposit located in the Rio Rocin Valley of central Chile at low altitude. It is in the same region as several existing operations including El Teniente, Rio Blanco, Los Pelambres, and Los Bronces

Vizcachitas?– Annuel Coppr Production and Size?

• Vizcachitas will have an initial life of mine of 26 years with average annual copper production of approximately 183,000 tonnes for the first eight years.
• The mine is expected to produce 8.8 billion lb. copper, 273.3 million lb. molybdenum and 32.7 million oz. silver.
• The deposit is currently open at depth, to the east, and to the west. Drilling has resumed in 2022 with the objective of expanding the resources beyond those currently considered in the PFS. There is still considerable upside to the project.

Vizcachitas – Prefeasability Results?

• Vizcachitas is expected to have a pre-production capital cost of $2.4 billion, with a construction period of 3.25 years. Payback period of 2.5 years from initial production.
• The project is expected to generate approx. 1,200 direct jobs when in operation and 5,000 direct jobs on average during construction.?
• The mine will have a low strip ratio (waste:ore) of 1.54:1 for the first 8 years and a strip ratio of 2.33:1 for the life of mine.
• Favorable metallurgy including low levels of clay, resulting in high copper recoveries (average of 91.1%) and supporting the use of filtered tailings.
• The project is at a relatively low evaluation (1950m) and benefits from its proximity to other mines.
• A 120km railway line that connects San Felipe with the Ventanas port facility is already being used for Codelco’s concentrate shipments.
• There are two existing smelters along the San Felipe-Ventanas rail line. The Codelco-owned Ventanas copper smelter is located near the port, while Anglo American’s Chagres smelter is situated approximately 25km from San Felipe.

Vizcachitas – Operations

Los Andes Copper is working to make the Vizcachitas project more sustainable by incorporating several important initiatives –

• Desalinated Water?– The company will use desalinated water for its operations which is in line with the government and industry goal of eliminating the need to use continental water. The company has signed a letter of intent to receive water from a proposed desalination plant that will produce about 2,050l/s for several mining operations in the area. The company will also provide water to small farmers and rural drinking water systems in the Petorca valley, which is one of the areas most affected by climate change.
• High-Pressure Grinding Rolls (HPGR)?– The company will utilize HPGR which reduces energy consumption by around 25% compared to traditional SAG mills. It will also help reduce dust emission and dramatically improve downtime for maintenance.
• Dry-Stacked Filtered Tailings?– By using dry stacking, the company will Reduce water consumption by approximately 50% from thickened tailings. It also confines the project’s footprint to a single valley and eliminates the need for a tailings dam
• Technology?– The operation was designed for autonomous fleets. The mine design considers extensive access works to accelerate production ramp up and minimize uphill material movement and haulage distances.

Conclusion

The Vizcachitas project is an exciting greenfield development that sits in a very well-established mining region of Chile. The project has robust economics that has been designed with sustainability in mind producing clean concentrates that are in low in arsenic. The project is expected to enter construction in 2026 with operations starting around 2028. The timeline will depend on it receiving environmental permits which will be the next challenge for the project owners.

For suppliers, this is another mine that is within driving distance of Santiago and that could provide ample opportunities to incorporate the latest technology.?

You can check out the Los Andes Copper Interactive presentation?here.?

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at?[email protected]