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Los Andes Copper advancing flagship Vizcachitas project, which is set to be Chile's next copper mine

Snapshot

The deposit sits in a huge land package, spanning 308 square kilometres, of which only a small portion has so far been explored

Los Andes Copper Ltd -

Quick facts: Los Andes Copper Ltd

Price: 6.95 CAD

TSX-V:LA
Market: TSX-V
Market Cap: $188.8 m
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  • One of the largest advanced copper projects in the Americas not held by a major miner
  • Management has the experience and track record to take asset into production
  • Production expected in 2025

What Los Andes Copper does:

Los Andes Copper Ltd (CVE:LA) is focused on advancing its pre-feasibility stage Vizcachitas copper-molybdenum porphyry project in Chile, which is set to become the country's next copper mine.

The deposit sits in a huge land package, spanning 308 square kilometres (sq km), of which only a small portion has so far been explored, and lies in the same geological belt as several other giant porphyry deposits.

These include the Río Blanco-Los Bronces deposit (home of the Los Bronces mine) at 101 million tonnes of contained copper and the Los Pelambres-Pachon, which houses 46 million tonnes of the red metal.

Vizcachitas already hosts a measured and indicated resources of 11.2 billion pounds of copper, 400 million pounds of molybdenum and 43.3 million ounces of silver.

There are road and rail access and the power grid can be accessed via a substation, the nearest of which is at Los Maquis, around 65km from the project site.

The asset is currently at pre-feasibility stage (PFS) after a positive preliminary economic assessment (PEA) in 2019 showed the project's compelling economics.

Using a copper price of US$3.50 a pound, the after-tax net present value (NPV) was pegged at US$2.7 billion, while the internal rate of return (IRR) was 26.7%.

Initial capex needed was put at US$1.88 billion for a project with 3.4 year pay-back time and a mine life of 45 years. Notably, daily processing of 110,000 tonnes per day would see only half the current resource mined after 45 years, so there is potential to considerably expand the project.

Los Andes Copper Ltd has a market cap of around C$184 million.

How is it doing:

Los Andes Copper's focus for 2020 was mainly centred on progressing the pre-feasibility study (PFS). In December last year, the company said a public participation process (PPP) for the permitting of drilling had been concluded with the aim of a drilling campaign to begin in the second quarter of 2021.

Over the coming weeks, the PPP process will continue and once completed, the environmental permit application will be resubmitted for voting at a regional committee, the company said.

As reported in August, the Environmental Evaluation Service (SEA) had been instructed by the courts to conduct a PPP process ahead of finalizing the environmental approval process, which the firm said had delayed drilling by a few months, but said it did not expect this to "impact the overall timing of the project".

Significantly, in September, the group reported the results of a geological mapping and geophysics program carried out over the winter season, under strict coronavirus (COVID-19) measures, which showed the potential of extensions to known mineralization to the north, east and south-east of the current resource estimate.

This new data in conjunction with the historical data will be used to outline priorities for the upcoming drill program, the company said.

In November, the group said metallurgical testing as part of the PFS had reinforced its decision to filter and dry-stack the tailings (waste from mining), a process, which reduces water consumption by 50% and also lessens energy use.

In June, last year, the company received US$14 million after it sold a net smelter return (NSR) royalty to Resource Capital Fund VI concerning part of the Vizcachitas project.

The royalty is calculated over the sale of all locatable minerals produced from the Santa Teresa 1/60, Santa Maria and San Cayetano 1/20 exploitation concessions. RCF VI will receive a 2% NSR for open-pit operations and a 1% NSR for underground operations.

Inflection points:

  • Permit received for drilling
  • Start of PFS drilling program and ensuing assays
  • Copper price moves 

What the boss says:

In September 2019, when Los Andes Copper confirmed that work had extended known mineralization at the Vizcachitas project, Antony Amberg, the group's chief executive and chief geologist, said in a statement that he was "very excited with the results of this work program."

He added: "The geological, geochemical and geophysical data have all demonstrated evidence of extensions to known mineralization to the north, east and south-east of the current resource estimate. This confirms our belief that the project has the potential to continue to grow as we advance the PFS study."

Contact the author at giles@proactiveinvestors.com

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