Anglo awarded Michiquillay copper project in Peru
Anglo American has announced it has been awarded the big Michiquillay copper project in Peru after a successful tender in Peru’s privatisation process.
Posted: Tuesday , 01 May 2007
Anglo American Corporation under new CEO Cynthia Carroll has announced it has been awarded the concession to develop the big Michiquillay copper polymetallic deposit in Peru. Anglo is paying the Peruvian government some US$403 million staged over the first five years of the project for the privilege.
Michiquillay is not a new deposit. It was drilled by Asarco in the late 60s and by the Japanese in the 70s and a combination of politics and poor copper prices kept it from being developed at the time.
Make no mistake, Michiquillay is a big potential mine, but its grades are fairly low and the metallurgy may be a little complex. There is byproduct gold, silver and molybdenum. It is also at an altitude of between 3,000 and 3,600 m above sea level which creates difficulties for operators, but the altitude factor has been overcome successfully by a number of other miners in Chile and Peru, so should not present too many undue problems
Peru state mining company Centromin described the project as comprising a copper porphyry deposit with gold and silver content. The mining concession area extends in 18,978 hectares and surface land in 1,206 hectares. The project has been extensively investigated - 159 diamond drillings were completed by previous owners totalling 41,600 meters and underground workings in 2,500m of tunnels have been performed.
Centromin reported mineral reserves (at a "cut - off" of 0.4 % Cu) equal 544 million tons with 0.69 % copper, 0.1 to 0.5 g/t of gold and 2 to 4 g/t of silver. Molybdenum is put by another source at 100-200 parts per million.
Japanese-controlled Michiquillay Mining conducted a feasibility study for an open pit operation of 40,000 t/day in the 1970s.
According to Carroll "Michiquillay is one of the best undeveloped copper prospects in the world with significant upside potential. Anglo American has extensive experience in Latin America where we have operated for many decades and we are excited by this opportunity to expand our activities in Peru."
Anglo is already conducting a feasibility study on another of Peru's long-known copper deposits at Quellaveco in the south of the country. Quellaveco is located in the Asana River Valley in the Moquegua District, 1,000 km south-east of the of Lima and 180 km north-east of the city of Arica in Chile. Anglo American plc holds an effective 80% interest while the International Finance Corporation holds a 20% share.
There have been a number of known mineral deposits in Peru which would seem to have great potential at current price levels, but some of these have been known, and have remained undeveloped, for an awful long time. Michiquillay and Quellaveco seem very attractive at current mineral prices, but developing these big tonnage low grade deposits at high altitude in the Peruvian Andes will be extremely costly. That this can be done profitably, though, is shown in particular by the long term success of Southern Copper's Toquepala and Cuajone mines.