Goldcorp and Teck Resources have agreed to combine their respective El Morro and Relincho projects in the Atacama region of Chile into a 50/50 joint venture that they have given the interim name of “Project Corridor.” El Morro and Relincho are separated by a distance of about 40 km. Based on the results of a preliminary economic assessment (PEA), the companies plan to construct a conveyor to transport ore from El Morro to a single-line mill at Relincho.
Teck President and CEO Don Lindsay said, “Combining these two neighboring assets is a common sense approach that allows us to consolidate infrastructure to reduce costs, reduce the environmental footprint, and provide greater returns over either standalone project.”
Goldcorp President and CEO Chuck Jeannes said, “We now have an improved development approach that we expect to significantly decrease initial capital requirements and increase financial returns, while ensuring the project is developed in partnership with our neighbors, creating lasting benefits for residents in the region and our shareholders.”
As of year-end 2014, the El Morro project hosted proven and probable reserves of 8.9 million oz of gold and 6.5 billion lb of copper, while the Relincho project hosted proven and probable reserves of 10.1 billion lb of copper and 464 million lb of molybdenum.
Combined project infrastructure will include a single desalination plant, a single port, a single transmission line, a single concentrator, and a common tailings facility. As a result, the environmental footprint of the project will be significantly less than would be the total footprints of the standalone projects.
The use of a common tailings facility at the Relincho site responds to concerns expressed by local communities regarding the location of the previously proposed El Morro tailings facility within the agriculturally important Huasco river watershed.
Common infrastructure also will significantly reduce project capital costs and ongoing operating costs.
Further, the PEA contemplates a phased development approach that will allow future expansions to be funded from project cash flows, thus significantly reducing the initial funding requirement. As a result, the initial capital cost to bring Project Corridor into production is targeted at $3.5 billion.
Individual feasibility studies of the standalone projects had estimated El Morro’s development cost at $3.9 billion in 2011 dollars and Relincho’s development cost at $4.5 billion in 2013 dollars.
The integrated project allows for the optimization of both resources, resulting in a longer mine life of at least 32 years, based on existing proven and probable reserves. Initial-stage development contemplates plant throughput capacity in the range of 90,000 to 110,000 mt/d, producing an average of approximately 190,000 mt/y of copper and 315,000 oz/y of gold in concentrates over the first full 10 years of operation.
In conjunction with the formation of Project Corridor, Goldcorp announced that it had acquired New Gold’s previous 30% interest in the El Morro project for $90 million in cash, along with a 4% gold stream to New Gold on future gold production from the El Morro property. Project Corridor was formed on the basis of Goldcorp’s 100% ownership of El Morro.