Kinross’s USD$1b Lobo-Marte Project Advancing

Another project in Chile’s USD$68.9 billion project is advancing. This time it is Kinross’s Lobo Marte which was purchased from Teck and Anglo American in 2008.

Lobo Marte is a gold deposit located in the Maricunga strip, 160 kilometers east of Copiapó, at an altitude of approximately 4,200 meters above sea level.

The project could produce a total of 4.5 million oz. gold over a 15-year mine life at an estimated cost of $995 million, according to a prefeasibility study (PFS) that was released last week.

The project would feature open pit mining at two deposits with an average strip ratio of 2.2, heap-leach recovery and a SART (sulphidization, acidification, recycling and thickening) plant.

The estimated capital costs includes mine equipment, crushing and storage facilities, conveyors, and site utilities and infrastructure. Sustaining infrastructure costs are expected to average approximately $30 million per year over the life of the operation, while sustaining capitalized stripping costs are expected to average approximately $45 million per year over 12 years of mining.

Mining would take place for 12 years, followed by three years of residual processing. Average all-in sustaining costs per oz. of gold at Lobo-Marte are estimated at $745; the gold recovery rate is expected to be 71%.

Lobo Marte returns are highly dependent on the gold price. At the reserve price of $1,200 per oz. gold, the project’s net present value (NPV) is estimated at $150 million and its internal rate of return (IRR) is only 7%. At the consensus long-term price of $1,500 per oz. gold, the NPV rises to $770 million and the IRR to 14%. And at the spot price of $1,800 per oz. gold, the NPV increases to $1.4 billion and the IRR to 21%.

The prefeasibility study released last week contemplates project construction beginning in 2025, with first production following in 2027.

Kinross noted that the project start date will depend on obtaining permits and the completion of mining in La Coipa, located about 50 kilometers northwest of Lobo Marte. It is expected that the project will be supplied from the same source of water that La Coipa has historically used in its operations. The company added that it expects to deliver an update of the useful life expectancy study of La Copia by the first quarter of 2022.

La Copia Restart

Last year, Kinross announced it would go ahead with a restart at La Coipa, which it expected to produce 690,000 gold-equivalent oz. from 2022 to 2024. Existing infrastructure at the camp would be refurbished and the mine fleet from its nearby Maricunga operation, which was placed on care and maintenance, would be redeployed to the site. Initial capital costs are pegged at $225 million.

The next step for the Lobo Marte project is the Environmental Impact Study. The permitting process is expected to take approximately three years, and the company will also continue to engage with local communities and stakeholders while conducting studies and planning the project.

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal