Annual Report 2007 - Antofagasta plc

CHAIRMAN’S REVIEWextending the mine life beyond 2009 and enablingproduction at its SX-EW plant to continue. Facedby the possibility of mine closure, Michilla started atwo–year exploration programme in 2007 to defineadditional high–grade feed for its plant, and toconsider alternatives including the option of leachingthe Antucoya/Buey Muerto ore (now the AntucoyaProject) on site and then supplying enriched coppersolution to Michilla by a 45 km pipeline. In orderto determine the viability of the project the Groupembarked on a major drilling and engineeringprogramme. Studies continued in 2007 and delineateda new comprehensive resource at Antucoya of 531.4million tonnes of 0.39 per cent copper (0.3 per centcopper cut off). A feasibility study is now in progresswhich is expected to be completed during 2008.During the year, a total of 14,000 metres of reversecirculation drill holes were completed at Michillaas part of an exploration programme which testedten target zones. Preliminary results from the Aurorazone, which is located approximately 7 kms northof Lince, were promising and follow–up drilling isplanned for 2008.Michilla completed a new 20,000 cubic metre capacitystorage terminal for sulphuric acid at its Caleta Michillaport in March 2007, which will reduce the cost ofMichilla’s sulphuric acid imports and enable it tosell surplus acid to other mines in the region.Michilla signed an agreement with its labourunion ahead of schedule in May 2007 for a four yearperiod, which is the maximum length under currentlegislation, and relations with its employees remainvery good.Esperanza projectEsperanza completed its feasibility study and receivedBoard approval in June 2007 for the project to beimplemented. Esperanza’s total copper sulphideresource is 1,130 million tonnes of 0.45 per centcopper, 0.16 g/t gold and 0.011 per cent molybdenumat a cut-off grade of 0.2 per cent equivalent copper.In addition, 119 million tonnes of oxide ore of 0.35 percent copper at a similar cut-off grade of 0.2 per centhave been confirmed. These geological resourceswere re-estimated and audited by AMEC during thefirst quarter of 2007. The approved mine plan includesproven and probable copper sulphide reserves of480 million tonnes of 0.57 per cent copper and0.23 g/t gold during the 15 year mine life.Esperanza will be developed as a conventional openpit mine. Its sulphide ore will be processed through aconventional crushing, milling and flotation plant at arate of 97,000 tpd to produce 700,000 tonnes per yearof concentrate containing 195,000 tonnes of payablecopper, 229,000 ounces of gold and 1,556,000 ouncesof silver for each of the first ten years of operation.Production of molybdenum is expected to start in 2015.Esperanza projectConstruction20072008 20092010BoardapprovalSubmission ofEnvironmentalImpactAssesment(EIA)Granting ofprovisionalenvironmentalauthorisationfor early worksExpectedEIA approvalExpected firstconcentrateshipmentAntofagasta plc Annual Report and Financial Statements 200713