El Pachón
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[edit] Brief overview
El Pachón is a cross-border project, developed under the auspices of the Mining Integration Treaty signed between Chile and Argentina in 1997. The project consists of a 100 hectare site where we hope to develop an open-pit copper mine, located in the district of Calingasta, San Juan province, Argentina, five kilometres from the border with Chile.[1]
[edit] Location
Located in Argentina 2 km from Chilean border and 4 km from Los Pelambres mine. Access will be through road and tunnel from Chile. Secondary route is 6-hour drive (167 km) to nearest Argentine town, Barreal. Access will be through road and tunnel from Chile. Secondary route is 6-hour drive (167 km) to nearest Argentine town, Barreal [2]The project is located in Calingasta district, San Juan province, Argentina.[3]
[edit] Ownership
The mine is owned 100% by Xstrata plc.[4]
[edit] Production per annum
According to the studies carried out so far, the ore body has the potential to produce, on average, around 200,000 tonnes per year of copper in concentrate during the mine’s useful life (around 20 years).[5]
[edit] Production Start date
Mine production is expected to start in 2012.[6]
[edit] Deposit size
Indicated Resource of 990 million tonnes at 0.61% Cu and 0.014% Mo at 0.40% cut-off.[7]
[edit] Operating cost per pound
Projected C1 cash cost per pound is $0.59/lb[8]
[edit] Capital Cost
Net capital investment is US$950M[9]
[edit] Notes
Conventional open pit mining and milling flotation operation.[10]
All process facilities, shops, tailings deposition and water supply will be in Argentina.[11]
On theChilean side, we plan to build the necessary infrastructure to transport product from the mine to a port on the Pacific coast.[12]
[edit] External Analysis
[edit] ECONOMY
- Argentina's economy has sustained a robust recovery following the severe 2001/2002 economic crisis, with five consecutive years of over 8% real growth in gross domestic product (GDP). Argentine GDP reached an estimated U.S. $255 billion in 2007, approximately U.S. $6,540 per capita, with investment increasing an estimated 13.5% for the year and representing approximately 23% of GDP. Economic expansion is creating jobs, with unemployment down from over 21% in 2002 to 8.8% in the third quarter of 2007. Poverty levels have also dropped dramatically. According to government statistics, 23.4% of the population in the 28 largest urban areas remained below the poverty line in the first half of 2007, down from over 50% in the immediate aftermath of the economic crisis. Argentina is expected to continue to perform well in 2008 with GDP growth projected at 6.9%, according to the Argentine Central Bank's consensus survey. A range of economic experts have identified challenges to sustaining high levels of economic growth in the future, including capacity constraints; the need for substantial new investment in primary infrastructure; potential energy shortages in the face of high growth and energy prices maintained by the government below international market levels. Other challenges include the increasing scarcity of skilled labor, inflation (8.5% in 2007 according to official statistics, but estimated by independent analysts to be significantly higher), and the heterodox policies employed to contain inflation.
- Economy (2007)
1. GDP: $255 billion (estimated).
2. Annual real growth rate: +8.5%.
3. Per capita GDP: $6,540 (estimated).
4. Natural resources: Fertile plains (pampas); minerals--lead, zinc, tin, copper, iron, manganese, oil, and uranium.
5. Agriculture (8% of GDP; including agribusiness, about 55% of exports by value): Products--grains, oilseeds and by-products, livestock products.
6. Industry (22.3% of GDP): Types--food processing, oil refining, machinery and equipment, textiles, chemicals and petrochemicals.
7. Trade: Exports ($55.4 billion)--oilseed by-products, vegetable oils, cars, fuels, grains. Major markets--MERCOSUR 22%; EU 18%; NAFTA 11%. Imports ($44.8 billion)--machinery, vehicles and transport products, chemicals. Major suppliers—7. MERCOSUR 36%; EU 17%, NAFTA 16%. Imported goods from the United States totaled approx. 13% of Argentine imported goods.
[edit] FOREIGN RELATIONS
Argentina's foreign policy priorities are focused on increasing regional partnerships, including expanding the MERCOSUR regional trade bloc by integrating Venezuela as a new full member. Argentina has played a positive role in promoting human rights and democratic institutions in the hemisphere, particularly in Haiti. Argentina currently has nearly 600 peacekeeping troops in Haiti in support of MINUSTAH, reflecting its traditionally strong support of UN peacekeeping operations. As a member of the Board of Governors of the International Atomic Energy Agency, Argentina has been a strong voice in support of nuclear non-proliferation issues.
[edit] NATIONAL SECURITY
The president, through a civilian minister of defense, commands the Argentine armed forces. The Interior Ministry controls the paramilitary Gendarmeria (border police), the Federal Police, the Prefectura Naval (coast guard), and the Airport Security Police. The Argentine armed forces maintain close defense cooperation and professional military education relationships with the United States. Other countries also have military relationships with the Argentine forces, principally Israel, Germany, France, Spain, Italy, Brazil, Chile, and Venezuela.
[edit] Social Stability
New social and political forces were seeking political power, including a modern military and labor movements that emerged from the growing urban working class.[13]
[edit] Technological Stability
U.S.-Argentine cooperation also includes science and technology initiatives in the fields of space, peaceful uses of nuclear energy, and the environment. In June 2007, the U.S. and Argentina modernized a bilateral civil aviation agreement to update safety and security safeguards and allow a significant increase in flight frequencies between the two countries, which hold excellent potential for increased tourism and business travel. An active media, together with widespread interest in American culture and society, make Argentina a receptive environment for the information and cultural exchange work of the U.S. Embassy. The Fulbright scholarship program has more than tripled the annual number of U.S. and Argentine academic grantees since 1994, and the U.S. Embassy is actively working to increase other education exchanges.[14]
[edit] =Risk Factors
- Metal price uncertainty.
Our net asset value estimate and 6-12 month target price are highly leveraged to our metal price forecasts. Deviation from these forecasts could result in materially different performance.
- Production growth uncertainty.
Forecasted timelines surrounding construction and production ramp-up remains an uncertainty. Start-up delays and below design operating rates could each postpone increases in production resulting in cash flow shortfalls from our estimates.
- Foreign country /geopolitical risk.
Global Copper's project is located in Chile which in the past has gone through periods of political uncertainty, including changes to mining policies, periodic labour disruptions, and currency appreciation at times as well as currency depreciation at other times.
- Project risks.
The Relincho project is at an early stage of work and is subject to a high level of uncertainty. Risks at this stage include: environmental compliance risks, permitting risks, employee accidents, personal injuries, operator errors, earthquakes, disease outbreaks, metallurgical/other processing problems, consultant errors; and indirectly: unexpected rock formations, difficult ground conditions, flooding or fires, road access failures, equipment failures, and interruptions due to inclement weather conditions, labour disputes and/or local protests. Share dilution. Global Copper does not have an operating history, nor does it generate cash flow at this time. The company is dependent upon the equity and/or debt markets to advance the project, use of which could impact the share valuation.[15]
