Two of Canada's largest mining companies will collaborate on a copper-zinc development project in San Nicolas, Mexico. The project is one of the largest sulphide deposits in the country that are hosted by undeveloped volcanoes and one of the largest copper mines in the world.
Agnico Eagle Mines acquired a 50 percent stake in Minas de San Nicolas (MSN), a subsidiary of Teck Resources and the owner of the project. Under the agreement, Agnico will subscribe for $580 million in MSN shares, which means a 50% notional acquisition cost of $290 million for the project. It will also pay 50 percent of the cost of the first $580 million project that Agnico will bear on its own. The transaction is expected to close in the first half of next year.
A feasibility study for the project is ongoing and is expected to be completed in early 2024. Tektronix completed a pre-feasibility study in San Nicolas in March 2021 that includes pit mines, trucks and forklifts, machining and flotation operations. The study estimates that production will begin in 2026 with a mine life of 15 years, with annual production of 63,000 tonnes of copper concentrate and 147,000 tonnes of zinc concentrate in the first 5 years. With an average grade of 1.13% for copper and 1.49% for zinc, the average operating cost for C1 was 16 cents per pound of copper for the first five years of production and 44 cents per pound for the entire age of the mine (excluding by-product credits). The estimated development capital cost is approximately $842 million with a payback period of 2.6 years. The study estimated an after-tax internal rate of return of 33 percent at $3.50 per pound of copper and $1.15 per pound of zinc.
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