Engineering & Mining Journal

JAN 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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Page 11 of 59

REGIONAL NEWS - LATIN AMERICA 10 E&MJ • JANUARY 2019 QB2 Construction to Proceed Teck Resources Ltd. announced that Sumi- tomo Metal Mining Co. Ltd. and Sumitomo Corp. have agreed to acquire a 30% indi- rect interest in Compañia Minera Teck Que- brada Blanca S.A., which owns the Quebra- da Blanca Phase 2 (QB2) project. The Teck board has also approved the QB2 project for full construction, with first production targeted for the second half of 2021. The consideration consists of US$1.2 billion contribution for a 30% indirect interest in QBSA; US$800 million earn- in contribution; US$400 million match- ing contribution; US$50 million to Teck upon QB2 achieving optimized target mill throughput of 154,000 metric tons per day (mt/d) by December 31, 2025, subject to adjustment; and a contingent contribution of 12% of the incremental NPV of a major expansion project (QB3) upon approval of construction, subject to adjustment. "QB2 is one of the world's premier un- developed copper assets and this trans- action further confirms the value of the project," said Don Lindsay, president and CEO of Teck. "This partnership signifi- cantly de-risks Teck's investment in the project, enhances our project economics, and preserves our ability to continue to return capital to shareholders and reduce bonds currently outstanding." The combination of proceeds from the transaction and proposed project fi- nancing reduces Teck's share of equity contributions toward the un-escalated US$4.739 billion estimated capital cost of the QB2 project to US$693 million with Teck's first contributions not required until late 2020. In light of the significant reduction in QB2 funding required from Teck due to the transaction proceeds and Teck's reduced project interest, the Teck Board will consider an additional return of capital to shareholders following clos- ing of the transaction. "QB2 will be a long-life, low-cost op- eration with major expansion potential, including the option to double produc- tion or more, to become a top five global copper producers," said Lindsay. "The copper growth from QB2 will, over time, help to balance our portfolio so that the contribution of our copper business could be similar to our world-class steelmaking coal business." Stage 2 Expansion Approved for Olaroz Lithium Project Orocobre Ltd., Toyota Tsusho Corp., and joint-venture company boards have ap- proved investment in a Stage 2 Expansion of the brine-based Olaroz lithium facili- ty in Jujuy province, northern Argentina. The expansion will increase Olaroz lithi- um carbonate (Li 2 CO 3 ) production capac- ity by approximately 25,000 metric tons per year (mt/y), bringing total capacity to about 42,500 mt/y. Olaroz Stage 2 will produce technical grade Li 2 CO 3 , part of which will be utilized as feedstock for a proposed lithium hydrox- ide (LiOH) plant to be built in Naraha, Ja- pan. During Stage 2 development, Olaroz Stage 1 will progressively migrate 100% to production of battery-grade Li 2 CO 3 . As of late November 2018, negoti- ations on the EPC contract for the pro- posed Naraha plant were advancing rap- idly between Toyota Tsusho as operator and Veolia, the preferred EPC contractor. Upon achieving full Stage 2 produc- tion rates, Olaroz product distribution will be 17,500 mt/y of battery-grade Li 2 CO 3 , 9,500 mt/y of technical-grade Li 2 CO 3 as feedstock for 10,000-mt/y of battery-grade LiOH production at Naraha, and an additional 15,500 mt/y of techni- cal-grade Li 2 CO 3 for marketing. Construction of key items for the Stage 2 expansion is ongoing, including ponds, roads and camp upgrades. Commission- ings of Stage 2 at Olaroz and of the Nara- ha LiOH plant are currently scheduled for the second half of 2020. Total capital expenditure for Olaroz Stage 2 is estimated at $295 million, in- cluding a $25 million contingency. This estimate excludes funding for a crystal- lizer/evaporator project, which would op- erate for both Stage 1 and Stage 2, on which feasibility studies are currently be- ing undertaken. The cost of this project is estimated at approximately $15 million. Montagne d'Or JV Proceeding With Mine Development The Montagne d'Or joint venture in French Guiana (Nordgold 55.01%/Columbus Gold 44.99%) has announced a decision to pro- ceed with permitting and development of its Montagne d'Or gold mine in northwest French Guiana. The project feasibility study published in March 2017 demonstrated the viability of an open-pit mining operation producing an average of 237,000 ounces per year (oz/y) of gold over the first 10 years of mine life at an average plant feed grade of 1.73 grams/metric ton of gold. The Montagne d'Or project benefits from straightforward metallurgy, excellent expected recovery rates, and a moderate strip ratio. Average all-in sustaining costs QB2 will allow the Quebrada Blanca mine to double production, making it one of the top five mines in the world. (Continued on p. 16)

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