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Los Azules – Argentina (Exploration)

Los Azules is a 100% owned advanced-stage porphyry copper exploration project located in the Cordilleran region of San Juan Province, Argentina near the border with Chile. Los Azules is one of the world's largest undeveloped high-grade open pit copper projects, which contains significant growth potential.

Preliminary Economic Assessment for Los Azules

Los Azules Project Preliminary Economic Assessment (PEA) effective Sept 1, 2017 (PDF 29MB)

In September 2017 McEwen Mining announced the results of an updated Preliminary Economic Assessment (PEA). Using the assumptions of $3.00/lb copper, $1,300/oz gold, and $17/oz silver, the Los Azules project generates a robust $2.2 billion After-Tax Net Present Value (NPV) (discounted at 8%) and 20.1% After-Tax Internal Rate of Return (IRR). The results of the 2017 PEA demonstrate that Los Azules is a robust, high margin, rapid pay-back, and long-life open pit mine at current copper, gold and silver prices.

Estimate of Mineral Resources for Los Azules

The PEA also includes an updated resource estimate, which incorporates the results of the 2016-2017 drilling program. The copper resource contains 10.2 billion pounds Indicated and 19.3 billion pounds Inferred. Other resources are presented in the table below.

Mineral Resources for the Los Azules Deposit (0.20 Cu Cut-Off)
Category Million Tonnes Average Grade Contained Metal
(B lb)
(M oz)
(M lb)
(M oz)
Indicated 962 0.48 0.06 0.003 1.8 10.2 1.7 57.3 55.7
Inferred 2,666 0.33 0.04 0.003 1.6 19.3 3.8 194.0 135.4
Cu = copper,   Au = gold,   Mo = molybdenum,   Ag = silver

The mineral resource estimate for Los Azules was prepared utilizing three-dimensional block models based on geostatistical applications. The mineral resources are estimated using ordinary kriging with a nominal block size of 20 m x 20 m x 15 m. To ensure the reported resource exhibits reasonable prospects for economic extraction, the mineral resource is limited within a pit shell generated around copper grades in blocks classified in the Indicated and Inferred categories. Generalized technical and economic parameters include a copper price of $2.75/lb, site operating costs of $1.70/t for mining, $5.00/t for processing and $1.00/t for general and administration, a pit slope of 34° and 90% metallurgical recovery.

PEA Study Highlights

The project economics for Los Azules contemplates two years of permitting, drilling, and feasibility studies; followed by a three year project implementation phase for production of the first copper concentrates. The economic values presented in the 2017 PEA are after-tax financial outcomes at the point of commencing the project implementation phase. Some highlights for the Base Case ($3.00/lb copper, $1,300/oz gold, $17/oz silver) include:

  • $2.2 billion After-Tax NPV (8% discount rate) and 20.1% After-Tax IRR;
  • 3.6 year payback and a 36 years Life of Mine (LOM);
  • 415 million lb average annual copper production for the first 10 years.
  • $1.11/lb average cash copper production costs (C1*) for the first 10 years, $1.28/lb average C1 costs over LOM.

*- C1 costs include at-mine cash operating costs, treatment & refining charges, mine reclamation & closure costs, concentrate transportation.

Other Pertinent Details of the PEA

The 2017 PEA is a substantial revision of the previous 2013 PEA and contemplates an enhanced implementation strategy resulting in improved economics while reducing execution risk. It envisions an owner-operated mine and conventional concentrator (flotation circuit) producing a copper concentrate for export. A phased implementation approach is employed to optimise initial capital expenditure. Phase 1 implementation will have a daily throughput of 80,000 tonnes per day (tpd), and Phase 2 will deliver a 50% increase in the processing rate to 120,000 tpd.

Life-of Mine Cash Flows (M=Millions)


Pre-production period 3 years
LOM 36 years
LOM concentrator feed of ore tonnage 1,488 Million tonnes
LOM waste stripping (1.05 projected stripping ratio) 1,510 Million tonnes
Concentrator feed Cu grade during first 5 years of operation 0.73%
Current classification of initial mill feed 93% Indicated - 7% Inferred


The Los Azules concentrator will produce copper concentrate as a final product. The process design has been modeled on the flowsheet and implementation of the recently constructed and operating Antapaccay (Glencore) copper concentrator located in the high Andes of Peru. Antapaccay shares many key characteristics with Los Azules, such as ore properties and process plant altitudes, making it an obvious choice upon which to model the proposed infrastructure. Some minor design changes, in equipment sizing only, have been incorporated based on operating experience at Antapaccay. The plant has been designed for average daily throughput of 80,000 tpd. The concentrator would be constructed on-site and would employ one comminution circuit consisting of a primary crusher, stockpile feed conveyor, reclaim conveyor, one SAG mill, two pebble crushers and two ball mills. The comminution circuit would be followed by flotation, thickening and filtration circuits, a Tailings Storage Facility and concentrate storage. LOM recovery of copper to concentrate is expected to be 91% at a concentrate grade of 30% Cu.

It is planned to expand the capacity of the plant to 120,000 tpd by Year 5 through the installation of additional comminution and flotation capacity. Gold and silver are recoverable to the copper concentrate. No other metals have been identified that would yield by-product credits, nor that have significant amounts of penalty elements.

Capital and Operating Costs

A key desired outcome of this study was to provide a project capital estimate with a reasonable level of accuracy. The tables below display initial capital and operating cost estimates:

Capital Cost Estimate ($ Millions)
Mining Equipment $215
Mine Pre-stripping Cost $193
Surface Scope (Concentrator, Power Line, Tailings, etc.) $979
Total Direct Cost $1,387
Total Indirect Costs $508
Contingency $420
Owner’s Cost $48
Total Initial Capital Cost $2,363
Operating Cost Estimate
Cost Area Million $/LOM $/t Mill Feed $/t Cu $/lb Cu
Mining 5,404 3.63 980 0.44
Process 5,774 3.88 1,047 0.47
Transport 2,587 1.74 469 0.21
G&A 1,620 1.09 294 0.13
Subtotal OPEX 15,385 10.34 2,789 1.26
Treatment/Refinery Charges 2,684 1.80 487 0.22
Au & Ag Credits (2,449) (1.65) (444) (0.20)
Net Costs 15,621 10.50 2,831 1.28

The PEA was prepared by Hatch Ltd., a global multidisciplinary management, engineering and development consultancy known for leadership in mining innovation, under the direction of Donald Brown C. P. Eng (Senior Vice President of Projects for McEwen Mining) with contributions from other industry specialists.

The 2017 PEA is preliminary in nature. The mine plan and economic model include the use of Inferred resources. Inferred resources are conceptual in nature and are considered to be too speculative to be used in an economic analysis except as allowed for by Canadian Securities Administrators' National Instrument 43-101 (NI 43-101) in PEA studies. There is no guarantee that Inferred resources can be converted to Indicated or Measured resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. As such, there is no guarantee the project economics described herein will be achieved.

Los Azules technical information and figure on this page were derived from the news release titled “Copper Shines Brightly for McEwen Mining – Enhanced Economics for Los Azules” released on September 7, 2017. To access the news release click here. To access the October 16, 2017 PEA click here.

Cautionary Notes

McEwen Mining reports its resource estimates in accordance with standards of the NI 43-101. These standards are different from the standards generally permitted in reports filed with the SEC. Under NI 43-101, McEwen Mining reports Measured, Indicated and Inferred resources, measurements which are generally not permitted in filings made with the SEC. According to Canadian NI 43-101 criteria, the estimation of measured resources and indicated resources involve greater uncertainty as to their economic feasibility than the estimation of proven and probable reserves. Under SEC Industry Guide 7 criteria, Measured, Indicated and Inferred resources are considered Mineralized Material. The SEC considers that in addition to greater uncertainty as to the economic feasibility of Mineralized Material compared to proven and probable reserves, there is also greater uncertainty as to the existence of Mineralized Material. U.S. investors are cautioned not to assume that Measured or Indicated resources will be converted into economically mineable reserves. The estimation of Inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources. 

Mineral resources which are not mineral reserves do not have demonstrated economic viability.

This website contains certain forward-looking statements and information and investors are encouraged to review our "Cautionary Note Regarding Forward Looking Statement". 

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