Capstone Mining mulls selling stake in Chile-based copper-iron project

Canada's Capstone Mining (TSX:CS) is considering selling a portion of its large scale 70%-ownedSanto Domingo copper-iron project in Chile, as part of a strategic process kicked off today after the release of a positive technical report.

The Vancouver-based company said the project, is located 50 km southwest of Codelco's El Salvador copper mine, said the report reveals that Santo Domingo has an after-tax net present value of $1.03-billion and an internal rate of return of 21.8%.

“This positive technical report reconfirms the value of Santo Domingo as a desirable copper-iron-gold project that has an approved environmental impact assessment in a mining-friendly jurisdiction with local community support," Capstone president and CEO Darren Pylot said in the statement.

Construction at the copper-iron Santo Domingo project is expected to start in 2020. 

Construction at the project, in which Korea Resources has a 30% interest, is expected to start in 2020. The technical report estimates that Santo Domingo would cost $1.51-billion to build, an 11% decrease from what stated in the feasibility study.  That would be paid back in 2.8 years.

Over its almost 18-year mine life, the project is slated to produce an average of 134-million pounds a year of copper, 4.2-million tonnes a year of iron concentrates and 17,000 annual ounces of gold.

In the meantime, Capstone is studying the potential of producing cobalt as a by-product and planning additional metallurgical work with the goal of improving gold recoveries.

The company is also considering the potential to utilize autonomous equipment and infrastructure sharing.

Capstone has two producing copper mines — the Pinto Valley Mine in Arizona, and the Cozamin Mine in Mexico.