Through its Chilean subsidiary Minera Valle Central (MVC) Amerigo Resources has signed a master agreement with the El Teniente division of Corporación Nacional del Cobre de Chile (Codelco) to buy the processing rights to the Cauquenes tailings deposit and extend MVC's rights to process El Teniente's new tailings until 2037.
Under the 23 year deal, MVC expects to produce around 1.7 billion pounds of copper and 43 million pounds of molybdenum.
This expansion will pave the way for new jobs and will have positive environmental effects, claims the company.
Amerigo Resources chairman and CEO Dr Klaus Zeitler said the processing of tailings from the Cauquenes deposit will require a major expansion of the company's operations in Chile and result in a number of new direct and indirect jobs over the life of the project.
"We estimate that, upon reaching full production levels from Cauquenes, the company's annual copper production will increase to approximately 90 million pounds, or double current levels, and production cash costs will decrease by close to 20%, both of which are expected to have a significantly positive effect on Amerigo's financial results for years to come," Zeitler said.
Amerigo president and chief operating officer Rob Henderson said that bank due diligence in respect of the Cauquenes expansion project is at an advanced stage and Amerigo anticipates receiving the remainder of required environmental approvals in the near future.
"Engineering is well underway so that construction can begin after receipt of environmental approvals and proceeds from financing are available," Henderson said.
The master agreement will also see the extension of existing fresh tailings and Colihues contracts from 2021 to 2037 and changes in the sliding scale for the fresh tailings royalty.
The increased royalty costs were mainly due to increases in the minimum price of copper and elimination of exchange rate provisions.
El Teniente has been in operation for more than 100 years and is currently undergoing an expansion to extend its mine life by 50 years.
Image: The cast copper mine El Teniente in Codelco, Chile. Photo: courtesy of Nicolas Schubert.