South32 proceeds with Sierra Gorda expansion project in Chile
Diversified miner South32 says final investment approval has been garnered for the Sierra Gorda joint venture's fourth grinding line project following a feasibility study that confirmed the potential for attractive returns from this brownfield plant expansion.
The project is expected to increase Sierra Gordon's processing capacity from 48-million tonnes a year to 60-million tonnes a year through the installation of a fourth grinding line, expanded crushing and flotation capacity and associated process infrastructure.
Sierra Gorda is a large, conventional openpit copper mine located in the Antofagasta region of northern Chile, in which South32 holds a 45% stake together with KGHM Polska Miedź, which holds the remaining 55% interest.
The project is expected to achieve first production during the 2030 financial year, with full production rates expected in the 2031 financial year.
South32 anticipates Sierra Gordon's average payable production to be 195 000 t of copper, 6 000 t of molybdenum, 58 000 oz of gold and 1.7-million ounces of silver, representing a 30% copper-equivalent increase in production compared to current levels.
Additionally, the expanded processing capacity is expected to support a 10% reduction in average operating unit costs.
The growth capital expenditure on the expansion project has been budgeted at $725-million between the 2027 and 2030 financial years before the project will deliver an internal rate of return of 20% at long-term copper prices of $5/lb or 23% at copper prices of $6/lb.
The project will be funded from operating cashflow and the Sierra Gorda joint venture debt facilities.
“Sierra Gorda’s operating performance and strong cash flow generation have provided a platform for value accretive copper growth from this long-life, high-margin operation.
“The fourth grinding line project will significantly increase copper production, lower operating unit costs and is expected to deliver attractive financial returns through a brownfield expansion that leverages existing infrastructure.
“Beyond this project, Sierra Gorda continues to offer substantial growth potential. The current Catabela pit remains open at depth and at the adjacent Catabela Northeast prospect we recently reported an initial Exploration Target of 1.1-billion tonnes grading 0.48% total copper to 2.9-billion tonnes grading 0.45% total copper, highlighting further life extension potential," says South32 CEO Matt Daley.
