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The Mollacas Project, which occurs at an altitude of 1,500 metres above sea level, covers an area of 33 square kilometres and is located in Region IV, Chile, approximately 65 kilometres east of the town of Ovalle near the small settlements of Valdivia and Las Mollacas, and 160 kilometres by road from the port of La Serena. The project can be accessed from Ovalle via a 53 kilometre asphalt road to the town of Rapel, and then by 12 kilometres of a well-maintained dirt road east of Rapel.
The Company holds title to 21 Exploitation Licences covering the Mollacas deposit and surrounding area, as well as 179 hectares of surface rights, the latter of which were acquired for the establishment of mine infrastructure such as the leach pads, processing plant, administration facilities and mine workshops (Figure 1). Importantly, Metminco owns the water rights to approximately 175 litres/sec from two canals which traverse the property. The estimated water usage for the planned mining operation is 40 litres/sec. However, the surface titles to the area covering the planned position of the open pit are held by a private land owner (approximately 100 hectares) who has filed various actions against Metminco's wholly owned subsidiary, Hampton Chile, relating to land access.
Prior to commencing exploration in 2007, Hampton Chile acquired a Right of Access (Easement) to conduct its planned exploration programs from the previous owner of the Mollacas Project, who had initially been granted the Easement in 2004 by the First Court of Ovalle (Original Easement). In May 2007 Hampton Chile applied for the First Easement Extension allowing mining access rights, which was granted on 11 November 2011. The private land owner appealed the decision, and in March 2014, the Court of Appeal of IV Region (Court of Appeal) ruled that Hampton's First Easement Extension was invalid, but did confirm that the Original Easement permitting access for exploration purposes remained in full force and effect. Hampton Chile has rigorously contested the decision by the Court of Appeal and the matter is currently before the Supreme Court of Chile with a decision expected to be handed down before 31 December 2015. In parallel, Hampton Chile are continuing to evaluate other options including actions of a legal nature and a negotiated settlement with the land owner for mining access.
Figure 1: Mineral and surface rights held by Metminco.
Mollacas is located along a north-south trending sequence of volcanics, which has been intruded by younger porphyritic dacites. The copper deposit is associated with an alteration zone that measures 800 metres by 600 metres, where the defined resource is limited to an oxide and supergene "blanket" that occurs above a primary, low grade, porphyry (Figure 2).
Figure 2: Mollacas mineral resource comprises an enriched copper oxide and supergene cap.
Metminco completed its final resource definition drilling program at Mollacas during the third quarter of 2011, comprising 2,200 metres of diamond drilling and 1,154 metres of reverse circulation drilling, with the objective of providing sufficient data to upgrade the November 2007 mineral resource to Measured and Indicated Mineral Resource categories, as well as to acquire sufficient material by ore type for further permeability and tall column leach testwork. The results of the diamond drilling program are summarised in the Significant Results - Table 3 section of the website.
Following the completion of the resource definition drilling program, 11 geotechnical drill holes (totalling 1,405m) to a maximum depth of 150 metres were completed, as well as 14 sterilisation drill holes (totalling 1,154m) to a maximum depth of 94 metres.
With the completion of the final drilling program at Mollacas, a further mineral resource was estimated by SRK Consulting (Chile) S.A. on 06 July 2012, which incorporates the results from 119 drill holes (16,280m), of which 95 holes are diamond drill holes (12,784m) and 24 are reverse circulation holes (3,496m).
The mineral resource estimate for the oxide and secondary sulphide zone, which is summarised in Tables 1 and 2 below, has been classified in accordance with the JORC Code (2004) for reporting Mineral Resources and Mineral Reserves. Sensitivities of the mineral resource to various Cu cut-off grades are summarised in Appendix 1.
Figure 3: Mollacas Copper Leach Project – Drill holes and Cu (%) x Thickness (m) contour plan (Oxides and Secondary Sulphides).
Figure 4: East-West section through the Mollacas Block Model.
It must be noted in Tables 1 and 2 below that CuT represents total leachable copper, whereas Cu_Sol represents total soluble copper.
Table 1: Mineral Resource Statement – Oxide and Secondary Sulphide Zone, Mollacas Project, SRK Consulting (Chile) S.A., July 06, 2012.
Table 2: Contained Metal Content by Resource Category – Oxide and Secondary Sulphide Zone.
Reported at a 0.2% Cu cut-off grade.
Rounding-off of figures may result in minor computational discrepancies, where this happens, it is not deemed significant.
Metminco has completed three separate phases of metallurgical column leach testwork on the different ore types identified at Mollacas over a period of 4 years.
The Phase 1 testwork was designed as a preliminary test program to determine whether the Mollacas oxide and chalcocite ore types leached, and whether any major problems existed in a possible leach environment. The columns used in this phase were 2 metre columns.
The Phase 2 testwork program used 6 metre columns, and although recoveries were acceptable, the columns remained flooded throughout the program. Hence, whilst recoveries were acceptable, acid consumption was high due to the fact that ferric leaching of the chalcocite ore was suppressed by the lack of oxygen in the system, principally due to the high solution application rate.
The Phase 3 testwork (Figure 5) was conducted within tightly controlled operating parameters so as to create the most conducive environment for ferric leaching of the chalcocite ore, and to determine the optimum acid addition strategy so as to minimise acid consumption - as the results of the Phase 2 testwork clearly demonstrated how sensitive the gangue rock is to the acid concentration applied to the ore.
The most significant findings arising from the Phase 3 testwork can be summarised as follows:
With the benefit of the pit optimisation study completed by the Company in 2013, and the Phase 3 metallurgical testwork results, the Scoping Study completed by SRK in 2008 was updated, inclusive of revised operating costs and capital estimates.
The Life of Mine production schedule incorporated the results of the pit optimisation work completed in 2013, with a modeled inventory of 14.5 million tonnes at a CuT grade of 0.52% (0.42% Cu_Sol), with an in situ soluble copper content of 60,753 tonnes. However, as the pit optimisation study of 2013 does not provide for the updated mining and processing costs, and given the substantial changes in the acid consumption rate, further optimisation work will be conducted during the planned Feasibility Study.
At a mining rate of 6,108 tonnes per day, the project has a Life of Mine of some 7 years, producing up to 8,000 tonnes of cathode copper per annum. The results of the Life of Mine Financial Model are summarised in Table 2 below, which support the robust nature of the economics, and hence the decision to progress with a Feasibility Study and Environmental Impact Assessment.
Table 2: Summary of results - Life of Mine Financial Model (March 2014).
Based on the encouraging results from the Life of Mine Financial Model, the decision was made to proceed with a Feasibility Study, as well as an Environmental Impact Assessment.
Work that has been completed on the project to-date in support of the planned Feasibility Study includes the following:
Figure 6: Preliminary infrastructural layout of the Mollacas Copper Leach SX/EW mining operation.
Following the ruling by the Court of Appeal of the IV Region that the Company's First Easement Extension was invalid, Metminco has deferred further work on the project until such time as land access for the conduct of mining has been resolved.