RE:RE:RE:RE:RE:RE:VolumeAC, thank you for the kind words. It is my slow season and my knees cringe at the thought of skiing daily for the next couple of months something that I never thought that would happen! So, with time on my hands I can dig into this stock that continues to befuddle me.
To answer your questions, one must consider all the aspects that FQ management must make to compare both deposits and their respective long-term economics. The comparables are: what FQ paid for each deposit, the capex and return on investment, the nature of the deposit, the community and environmental issues and the government’s full support of the project (including intervention into issues when required – similar to that in North America with its pipelines).
First let’s address the community and environmental concerns. The Haquira deposit is in a large drainage basin and it appears that the deposit will be an sidehill cut open pit style of mine with a very steep northern pit wall. This information I have gathered from the Antares 43-101 of 2010 and is my interpretation of the data. It is difficult based on the angle of the photos to determine the area of waste dumps and leach pads but it appears that both will be in areas where there are farms and the river (water supply) that flows to the villages situated at the bottom of the basin and downstream. I understand that FQ has already walked away a few times due to latent community issues.
I have no idea how the government of the Haquira community will respond to these issues and it will be very interesting to see the negotiations that result in support of this project.
With respect to Taca Taca, there are no communities in the vicinity of the deposit and the environmental impact, subject to resolving the issues that I mentioned in my last post, the mine should get clear path from the Salta Provincial government.
In terms of the mineralization, the Haquira deposit has a 300-meter-thick sequence of leach cap mineralization that includes an assortment of secondary and oxide copper minerals. The plan of Antares (previous owner of Haquira) was to build a SX-EW (solution extraction – electro winning) metallurgical plant to produce copper sheets which implies a large-scale heap leach operation using sulphuric acid in an open-air environment. In addition, the deposit has a lower sulphide zone that will require a conventional flotation circuit to recover the metals in concentrate. This will be shipped to offshore smelters. This creates havoc in communities with ore trucks utilizing the roads that run through the villages. Las Bambas, a large copper mine that is 6 miles to the north has had blockades that have interrupted its operation.
Taca Taca, according to the Lumina 43-101 intends to build a railway loading system that will connect with the existing railway to export the concentrates offshore. The railway cars are covered that prevent leakage of concentrates in the transportation process. Taca Taca also appears, to me, to be a simpler deposit as it has a “normal” sulphide deposit with some leach material near the surface. Do to the small size of this leached zone there should be no need to build an SX-EW facility. So, no leach pads on surface and no open air sulphuric acid use. And, the country has its infrastructure increased at no expense to the people.
With respect to the NSR of the Haquira concentrate, it will be much less valuable than the Taca Taca concentrate because the deposit only has an estimated 900,000 ounces of gold prior to metallurgical loss. Plus, the intent is to use cyanide in a leaching system to recover the gold.
The Taca Taca deposit is estimated to contain 3.3 million ounces of gold most of which reports to the copper concentrate which implies a much higher NSR than will be achievable at Haquira. however, if, Haquira builds an SX-EW plant it will receive a higher price per pound for copper.
Taca Taca is a much larger deposit than Haquira and will produce a much larger volume of copper that will get FQ closer to its target of becoming a 1,000,000-tonne copper producer.
Taca Taca should not need to use cyanide or sulphuric acid in an open-air environment.
So, it appears that both the environmental concerns and the community issues are strongly in favour of Taca Taca and the volume of copper produced over life of mine, which may be twice the volume that Haquira will produce.
Time to get a life but this is very interesting, and I will continue with my reading later today.