Base metals miner Lundin Mining has approved the €256.5-million Zinc Expansion Project at its Neves-Corvo mine, in Portugal, which will more than double the operation’s zinc production.
Announcing the results of a positive feasibility study for ZEP, CEO Paul Conibear reported this week that early project work was already under way to facilitate a “rapid start” following the approval of an environmental-impact assessment and amendments to the environmental licence.
The results of the feasibility study for ZEP, which the Portuguese authorities recently granted ‘national interest’ status, determined that the expansion will increase the Neves-Corvo mine’s production to 180 000 t/y, from the current 2017 guidance of between 72 000 t/y and 75 000 t/y. Zinc production is expected to average of 150 000 t/y between 2020 and 2030.
The ZEP is also expected to improve the copper production profile, while increasing lead production to an average of 20 000 t/y.
The expansion is based on increasing the zinc plant throughput to 2.5-million tonnes a year and developing a deeper, higher grade zinc area known as Lombador Phase 2. Lundin will install a new underground crusher and conveyor system to handle ore from the Lamdor orebody, upgrade the existing hoisting shaft, expand the zinc processing plant capacity and expand the capacity of tailings management facility, as well as other infrastructure.
The feasibility study demonstrated the viability of executing the ZEP with an estimated incremental post-tax net present value of €180-million at an 8% discount rate, and an estimated internal rate of return of 22% using long-term metal prices of $1.00/lb zinc and $3.00/lb copper.
The forecast payback period is less than four years from production start and the forecast average C1 cash cost between 2020 and 2030 is $0.28/lb copper net of by-product credits or alternatively $0.29/lb zinc net of by-product credits. The breakeven zinc price for an NPV of zero, at an 8% discount rate, is $0.71/lb of zinc.
Lundin expects to receive approval for the ZEP EIA early in the third quarter of this year. Surface construction is forecast to start in the first quarter of 2018. Surface and underground construction is forecast to be completed by the third quarter 2019, and production ramp up completed by the end of that year.