Xstrata Copper’s executive committee has given approval for a prefeasibility study to begin evaluating the development of a copper sulphide deposit at the Lomas Bayas project, northern Chile.

The prefeasibility study, which will consist of new drilling, metallurgical tests and geomechanical studies, is expected to be completed at the end of 2012.

It will assess a possible investment of $1.6bn to expand the mine’s annual production capacity of 140,000t of copper and extend the life of the project to 2039.

The study will be used to optimise mine and production plans, estimate costs more precisely and advance towards the feasibility stage at Lomas Bayas.

The study will also assess synergies and scale economies with the Lomas Bayas II project, which is currently under construction.

The Lomas Bayas project is expected to start production in 2017.