The El Pilar property is 100% owned by Mercator and is located in the state of Sonora, Mexico approximately 15 kilometres south of the international border with the United States. The property is situated in a highly prospective belt of porphyry copper deposits ranging from La Caridad in the south through to central Arizona in the north. This copper trend accounts for the second largest concentration of porphyry copper deposits in the world where mining for copper has been continuous for over 100 years.
El Pilar is located close to infrastructure and skilled labour and will be conventional open-pit mining. Run-of-mine leach ore will be mined and stacked on a leach pad on 3-meter lift heights. Copper cathode will be produced from the oxide copper ore by acid leaching over a 180-day cycle and processed through the solvent extraction/electrowinning (SX/EW) processing plant. The project will include an on-site acid plant and associated power plant ensuring stable low cost acid and power supply.
Investment highlights of the Base Case of El Pilar(1)
- Net present value ("NPV") after-tax, discounted at 8%, of US$416.0 million;
- Internal rate of return ("IRR"), after-tax, of 36.6%;
- Payback period of 1.8 years;
- Life-of-mine ("LOM") average annual production of 79.3 million pounds of copper cathode, with copper cathode production averaging 85.4 million pounds in the first five years;
- Expected average life of mine total cash operating costs (2) are $1.34 per pound of payable copper, average $1.22 per pound in the first five years;
- Initial capital of US$280 million, excluding working capital;
- 13-year mine life, with total estimated LOM copper production of 998.3 million pounds; and
- Mining and stacking of run-of-mine ore at an average LOM rate of 52,000 metric tonnes per day, 49,000 metric tonnes per day in the first five years.
(1) Metal Prices used were $3.83/lb copper price per pound Year 1, $3.44/lb Year 2, $3.14/lb Year 3 and $2.60/lb for the remaining life of mine, averaging $2.82/lb copper over the life of mine.
(2) Total cash operating costs is a non-IFRS alternative performance measure furnished to provide additional information.
The feasibility study also has options to further enhance the value of the Project and include:
a) using 3-meter lift heights over a 360-day leach cycle which could result in an increase of 14% in total copper recovered to 1.1 billion pounds and as a result could increase NPV@8% to $565 million and IRR to 43.3%,
b) continue contract mining for the life of the mine as compared to ending the contract miner in Year 3 as noted in the Base Case. This could further reduce future capital expenditures and provide the Company with additional flexibility.
El Pilar presentation - July 2013
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2012: Year in Review
During the year, Mercator's achivements at El Pilar were to further de-risk the project and ensure its 'construction-ready' status. This was achieved by: (1) releasing in October 2012 an optimized feasibility study which highlighted the potential for further project economics by reducing the leach pad lift heights to three meters from the six meters used in the November 2011 Feasibility Study; and (2) obtaining all necessary permits to start construction. Also, approximately 30% of the detailed engineering has been completed on the project.
Once a value-accretive financing package to build El Pilar has been obtained, the Company anticipates construction to take approximately 15 months, which is a relatively short time frame to start recovering the Company's initial investment. Also, with the short construction timeline, the project can be timed to market conditions. With an initial investment of $280 million, and the capacity to produce nearly 85 million pounds of cathode copper annually in the first five years, El Pilar is one of the industry's lowest capital intensive, low-risk, high-return projects.
The following tableshows Proven and Probable Mineral Reserves as at September 2012:
El Pilar Reserves
El Pilar Resources, inclusive of Reserves
||Soluble Copper %
||Copper (m lbs)
Mineral Resources for El Pilar are estimated at a cut-off grade of 0.15% total Cu and $2.15 copper price
|0.15% copper cut-off
||Soluble Copper %
||Copper (m lbs)
|Measured + Indicated
The mineral resource estimate was calculated under the of Michael Broch, Mercator's Vice-President Exploration & Evaluations, deemed independent qualified person as this term is defined in National Instrument 43-101.
Tables Source: 2012 ElPilar Technical Report.
El Pilar Project
October 18, 2012
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Mike Broch, BSc, Geology, Msc, Economic Geology, FAusIMM, the Company's Vice-President Exploration & Evaluations, a Qualified Person as defined by NI 43-101, supervised the preparation of and verified and approved the technical information in respect of the El Pilar project contained on this website