Solaris Resources (TSX: SLS) has completed a pre-feasibility study on their flagship Warintza project, found in southern Ecuador. The study, which came with an updated mineral resource estimate and maiden mineral reserve filing, has outlined a low cost copper operation with a post-tax net present value of US$4.6 billion, an internal rate of return of 26%, and a payback period of just 2.6 years.
The study outlines a conventional open pit operation with an initial life of mine of 22 years, although Solaris suggests up to 30 years of mine life could be added to that estimate. The current mine life is said to be constrained by the maximum processing capacity permitted under the current environmental impact assessment
Average annual copper equivalent production over that life of mine is estimated at 205,000 tonnes, although much of that production is weighted to the first five years of operations, when average production is expected to be around 304,000 tonnes of copper equivalent.
Broken out, over the life of mine that copper equivalent production figure amounts to 156,000 tonnes of annual copper production, alongside 7,000 tonnes of molybdenum, 49,000 ounces of gold, and 1.2 million ounces of silver.
Average annual throughput is estimated at 60.2 million tonnes with a strip ratio of 0.53 to 1, with head grades of 0.41% copper equivalent expected over the life of mine, which rises to as much as 0.58% copper equivalent over those first five years.
Initial capital costs here are estimated at $3.7 billion, alongside sustaining costs of $1.7 billion and closure costs of $200 million. On a per pound basis, first-quartile costing of just $1.01 in cash costs over the life of mine are forecasted, which fall as low as $0.59 a pound in those first five years of production. All in sustaining costs meanwhile are estimated at $1.25 a pound over the life of mine, which falls to $0.85 a pound in the initial years of production.
From a financial perspective, average annual free cash flow of $1.09 billion is anticipated on a pre-tax basis.
“With over 3.7 billion tonnes of Measured and Indicated Resources, 2.1 billion tonnes of Inferred Resources, 1.3 billion tonnes of Mineral Reserves, a low strip ratio, and early access to high-grade material, Warintza stands as one of the most compelling copper development assets anywhere in the world. We are fully funded for a construction decision through a US$200 million non-dilutive financing from Royal Gold earlier this year, while importantly retaining 100% ownership and full strategic control,” commented Matthew Rowlinson, CEO of Solaris Resources.
Solaris Resources last traded at $8.96 on the TSX.
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