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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: CusterInvestor who wrote (55822)1/23/2008 9:39:58 PM
From: tyc:>  Read Replies (1) of 78419
 
On "the other thread" Howy (TrueScouse) recently did some "back of the envelope" calculations re El Morro. I thought I'd try my hand at the same kind of thing. ( Beware.. I'm no mathematician nor analyst)

I wanted to compare the attractiveness of El Morro project with Antamina at the time that production was first contemplated . I did a google search (Rio Algom + Antamina + feasibility) and learned that the Antamina final feasibility study envisaged annual production of 600M lbs of copper at a cash cost of .40c per lb of copper net of by-product credits (zinc). At the time, I believe that copper was selling at less that $1 per lb so projected cash markup was something less than .60c per lb; multiply by 600M achieves annual cash markup of $360M dollars.

The recent NR regarding El Morro feasibility said annual production in first five years of 195,285 tonnes of copper (or
437M lbs. Minesite cash costs would be .74c per lb of copper net of gold by product credits @ $500 per oz. If we use $2 per lb as the probable selling price of copper, that provides a cash mark-up of $1.26 per lb of copper. Now multiply by 437M and we arrive at 551M dollars annual cash mark-up.

Capital costs for each miine appear similar at ~$2.5 Billion. I deduce that El Morro is just as attractive now as Antamina was then

("Operating costs are estimated at $10.56/tonne of ore and a mine site cash cost of $0.74 cents/lb copper, after gold credits at a long-term gold price of $500")
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