Petaqquilla
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[edit] Brief overview
Petaquilla is a large open-pit copper project in Panama that’s in the pre-development phase. The property is located 120 kilometers west of Panama City, 20 kilometers from the Caribbean coast.[1] Petaquilla Copper Ltd was incorporated under the Business Corporations Act (British Columbia) on March 15th, 2006. The Company was created to develop the copper assets previously held by Petaquilla Minerals Ltd. In 1998 AMEC Engineering (formerly H.A. Simons) completed a feasibility study for joint venture partners Inmet Mining and Teck Cominco. The project was estimated to contain a mineral resource of 1.115 billion tones grading 0.50% copper, 0.09 grams per tones gold, 0.015% molybdenum, as well as recoverable silver. Since 1998 the Company has concentrated on upgrading the 1998 AMEC resource estimates to NI-43-101 standards while concurrently embarking on an aggressive drill program in order to increase resources.[2]
[edit] Location
The project area is located in the District of Donoso, Province of Colon, approximately 100 kilometers west of the Panama Canal on the Caribbean Coast. Petaquilla Minerals' land holdings are situated in the perfect position to ship concentrate at low cost to Europe, Asia, and North America.[3]
[edit] Ownership
Inmet holds a 48 percent equity interest in Minera Petaquilla, S.A., the Panamanian company that holds the Petaquilla concession, while Petaquilla currently holds a 52 percent equity interest.[4]
[edit] Production per annum
Mine production
- Mineral resources under mine plan(1) 986 million tones
- Mine life 23 years
- Daily mill throughput 120,000 tones
- Strip ratio (waste to ore) 0.97 to 1.00
Metal production – life-of-mine
- Copper 4,445,000 tones
- Gold 1,628,000 ounces
- Molybdenum 59,500 tones
Metal production – average annual years 1 to 10
- Copper 223,000 tones
- Gold 87,000 ounces
- Molybdenum 2,680 tones.[5]
[edit] Producton start date
The first gold pour is scheduled for Q.3 2008.[6]
[edit] Deposit size
An initial measured resource estimate of 1.02Mt grading 0.85% copper for 19.0Mlb (8,618t) copper for El Real, while Brazo is estimated to host inferred resources of 37.4Mt grading 0.63% copper for 517Mlb copper contained, both at a 0.5% cutoff.[7]
[edit] Capital Cost
Estimated that the capital cost required to develop the Petaquilla project would be US $3.5 billion (including a contingency of $515 million but not working capital or escalation) .[8]
[edit] Operating cost per pound
Cash operating costs in years 1 to 10 of US $0.76 per pound of copper produced.[9]
[edit] Notes
Open pit mine.
[edit] External Analysis
[edit] A favorable tax regime
1. Accelerated depreciation and depletion allowance.
2. Practically all supplies and equipment required by the project are exempt from import duties.
3. Exemption from all income taxes (except the mineral production royalty) until the retirement of all construction financing.
4. Tax will not be withheld on interest payments to foreign lenders or dividends to foreign shareholders.
5. Future changes in legislation that are inconsistent with Ley Petaquilla will not apply to the Owners.
6. The first phase in the Plan is the development of the Molejon Gold Deposit by PTQ commencing in 2006. The development of the world-class Petaquilla copper deposit is included in subsequent phases of the Plan, and will be the responsibility of Minera Petaquilla S.A., the joint venture company owned by PTQ, Teck and Inmet.[10]
[edit] Investors flock to Panama
The fast pace of economic growth is being fuelled by enormous infrastructure projects and the booming construction sector. Where once wealthy Latin Americans invested in Miami, they are now looking closer to home. Rich Venezuelans, Bolivians and Brazilians are flocking to Panama, buying up property and starting businesses away from the political upheavals and endemic violence in their homelands. Europeans and in particular the Spanish, are taking advantage of the strength of the Euro and piling into the region. The main reason that the construction industry is breaking all records in the current boom is the demand for property that is coming from North America The stable political climate long aligned towards the U.S. has proven attractive to investors, and the policy is now paying off. Adding to the growth expected from the Canal expansion, the country is set to profit from a world class mining operation coming online in 2007 in the Petaquilla region, as well as from the influx of foreigners as tourists and retirees. In the capital, a major investment project is focused on improving transport links, cleaning the bay and providing large swathes of green space for residents and visitors alike. Benjamin Colomarco, Minister of Public Works, expects that the project will be underway by 2009, complementing the Mass Transit System project which starts this year aimed at alleviating the chronic congestion that the capital suffers from. “All foreign investors have the same opportunities as domestic companies… everyone operates under the same rules. Panama is going to be a true center of attraction for investors,” asserts Colomarco. With the determination of the Government to address existing problems at the same time as maintaining Latin America’s highest GDP growth rates, the future for Panama, its citizens and investors, is looking very good indeed.
[edit] Stability and security
A. Political and economic stability is everything. Here we have security in the legal system, in the physical aspects of life and good medical facilities like the John Hopkins [in Panama City]. As for crime, you can’t compare us to Columbia or Mexico or any other country. We don’t have institutionalized criminal actions, least of all against foreigners.[11]
B. Petaquilla, together with the Government of Panama, is committed to bringing the best of modern practices and philosophies to its operations. Petaquilla will make positive improvements to the environment. Jaime Roquebert is sensitive to the negative press mining companies receive. “It isn’t easy to convince people, there will always be detractors. The fact is that the environment is getting worse with a subsistence economy, therefore a mining project is a blessing.” The Panamanian government has been an early supporter of the Petaquilla Project.[12]
C. In the 1990s, growth had been running at 4% with low inflation, however it fell from 2.5% in 2000 to only 0.3% in 2001 and about 0.8% in 2002. Growth picked up again in 2003 to 4.1% and jumped to 6% in 2004, due partly to a one-off tax break aimed at investors in housing construction. Under Torrijos Panama is enjoying something of a boom; growth was 8.1% in 2006 and, according to some estimates, could exceed 10% in 2007.[13]
[edit] Panama Business Environment
In terms of business and communications infrastructure, the long-term US influence on Panama has been very beneficial, Panama City in particular having the highest international standards. The well-established banking sector, however doubtful some of its antecedents, has also demanded high standards.[14]
[edit] Panama Import of Foreign Capital
There are no exchange controls in Panama and there is no Central Bank. Foreign investment is welcomed, and may be freely repatriated.[15]
