[miningmx.com] – GOLD Fields’ ambitions to give geographic diversity to its gold production, especially given the interruptions at its South African mines lately, suffered a setback when it said its 8 million equivalent gold ounce Chucapaca project had failed to meet the firm’s investment criteria.
The project, set in the high altitude climes of Peru, is operated by Gold Fields which owns 51% of the project, and held in joint venture with Buenaventura which holds the balance of the project.
“The partners have studied the viability of a large open-pit operation capable of sustaining a 30,000 tonnes per day throughput,” Gold Fields said in a statement to the JSE today. Initial studies suggested a 100,000 oz/year mine but this has since changed in the feasibility study.
“A first draft of the feasibility study has been completed and as a result of relatively high capital and operating costs this option would not have delivered acceptable project returns,” the company said in its statement.
Gold Fields said in its 2011 annual report that it had high hopes for Chucapaca: “Indications are that Chucapaca has the potential to possibly become the second Gold Fields mine in the South America region and one of the new generation international growth projects”.
But the partners said they were not abandoning the project and would examine other options including adding an underground section, adding to the resource base through additional exploration, and a capital and opex optimisation.
“The orebody is good but Gold Fields has a stricter hurdle rate these days in terms of what is going to work,” said Willie Jacobsz, spokesperson for Gold Fields. “This will be a mine but the capital required is not yet supported by what’s there,” he said. Jacobsz declined to detail the capital required in the feasibility study.
Hinting perhaps at the need to secure additional exploration permits, the company said it needed the support of all stakeholders “… particularly the neighbouring communities”.
Chucapaca was predicated on a gold price of $1,150/oz against the current price of $1,728/oz and a copper price of $3 per pound against a current cash price as per the London Metal Exchange of $3.45/lb.
Nick Holland, CEO of Gold Fields, said at the group’s June quarter results that it would seek smaller, profitable operations in the future.
“We’re exploring whether we should build 150,000 oz/year operations such as Cerro Corona. If it makes money, what’s wrong with that?’ he said.
