Antofagasta plc has received approval from its board of directors for development of its Antucoya heap-leach copper project in Chile’s Antofagasta region for an estimated $1.3 billion. The company also has signed a memorandum of understanding with Marubeni Corp. pursuant to which, subject to conclusion of definitive agreements, Marubeni will become a 30% partner in the project for consideration totaling $350 million and a commitment to fund its pro rata share of the development costs of the project. Antofagasta and Marubeni expect to enter into definitive agreements during the first quarter of 2012 and to close the transaction during the second half of 2012 upon satisfaction of certain conditions to be set forth in the definitive agreements.

Antucoya is a copper oxide deposit located 45 km east of Antofagasta’s Michilla mine. The project is expected to produce an average of 80,000 mt/y of copper cathodes through a standard heap-leach process over a mine life of about 20 years. The environmental impact assessment for the project was approved in June 2011. Construction is expected to take approximately 2.5 years, with production expected to start during 2014.

Proved and probable ore reserves at Antucoya total 642 million mt, grading 0.35% copper at a cut-off grade of 0.21%. While the project will be one of the lowest-copper-grade green field projects to be developed in Chile, Antofagasta cites a number of compensating factors that support development.

The Antucoya deposit is relatively shallow, which will reduce the duration and cost of the pre-stripping, and the stripping ratio is low at a waste-to-ore ratio of about 1:1. The deposit is located within a well-developed mining area, with good pre-existing infrastructure. The operation will use untreated seawater in its process. A sulphur burning plant will be constructed to supply sulphuric acid to the operation, reducing the overall cost of the acid supply.