The Cobre Panama Project is a copper-gold-molybdenum-silver porphyry deposit situated in Colon Province, Republic of Panama, 120 km west of Panama City. The deposit is situated in the southern portion of a large granodiorite batholith. Copper-bearing sulphide is mostly chalcopyrite with minor bornite.
The Cobre Panama Project is composed of a series of open pits. Due to the use of Ultra Class equipment and need to manage high rainfall, the pit is mined using a terraced approach, rather than the typical sequence of phased pits and pushbacks. This approach offers little flexibility in ore selection and schedule, but benefits from the reduced need to relocate infrastructure as the pit progresses. Ramps are designed for triple lane traffic and makes use of trolley-assist for increased speed and efficiency. At steady state, production is planned for 210 Mt ore and waste moved per year (almost 600 kt/d). A total of 6,306.1 Mt will be removed from the pit, of which 3,143.7 Mt is ore and 3,157.8 Mt is waste, achieving a favourable strip ratio of 1:1. The project has a LOM of almost four decades. Average annual copper production for the first five years is 310 kt followed by an increase to 377 kt. Average annual by-product is 2,717 t Mo, 107 koz Au, and 1.7 Moz Ag.
| Metal | Copper | Molybdenum | Gold | Silver |
|---|---|---|---|---|
| Price | US$3.00/lb | US$13.50/lb | US$1,200/oz | US$16.00/oz |
| Head Grade | 0.21% | 41.31 ppm | 0.05 ppm | 1.02 ppm |
| Recovery | 90.2% | 53.4% | 55.9% | 45.0% |
| Payable | 96.15% | 86.20% | 90.00% | 90.00% |
| Classification | Tonnes (Mt) | TCu (%) | Mo (ppm) | Au (g/t) | Ag (g/t) |
|---|---|---|---|---|---|
| Reserve | 3,144 | 0.38 | 60.00 | 0.07 | 1.37 |
| Resource (M+I) | 516 | 0.31 | 59.87 | 0.07 | 1.16 |
| Inferred | 1,097 | 0.26 | 50.00 | 0.04 | 1.09 |
| Classification | Tonnes (Mt) | Cu (Mt) | Mo (kt) | Au (Moz) | Ag (Moz) |
|---|---|---|---|---|---|
| Reserve | 3,144 | 11.9 | 188.6 | 7.1 | 138.5 |
| Resource (M+I) | 516 | 1.6 | 30.9 | 1.2 | 19.2 |
| Inferred | 1,097 | 2.9 | 54.9 | 1.4 | 38.4 |
Project economics warrant further discussion. The technical report cites a pre-tax NPV8.5% of US$14.3 B excluding pre-production capital spend of $6.5 B. Including this reduces NPV8.5% to US$6.6 B. Additionally, the project was evaluated at 2% royalty payable to the government of Panama under the controversial usage of Law 9. Under Law 406, introduced shortly after the publication of this technical report, royalties increased to 12% to 16%, with minimum payable amount of US$357 M. Implementation details are not well known, but our estimates provide a revised pre-tax NPV8.5% range between US$3.1 B and US$4.1 B. A new study of project economics is likely warranted based on the substantial changes in project economics.
Cobre Panama is captivating for its shear scale, social impact, and its epic fall. This is Panama’s second largest employer, creating 40,000 jobs, representing 5% of the nation’s GDP, and 75% of its exports. However, it has been mired by controversy since its inception and even its economic importance was not enough to save it from closure. Cobre Panama shakes the industry to its core, a lesson that even a high quality deposit, offering huge economic incentive to a nation, in a perceived stable jurisdiction, could end so abruptly. Legal steps are being taken and the results remain to be seen as the mining industry nervously holds onto their seats. One thing is for certain, jurisdictional risk will never again be underestimated by owners and those funding mining projects.
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective Dec 31, 2018 (INSERT), with commentary from the author. Statements above do not represent the views of First Quantum Minerals. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.