Xstrata Copper announces corporate approvals for a total investment of US$542 million (approximately AUD589 million) to extend the life of its Ernest Henry Mining (EHM) operations near Cloncurry in north-west Queensland, Australia, to at least 2024, through the transformation of open pit mining operations to a major underground mine together with the construction of an associated magnetite extraction plant.
The decision follows feasibility studies into the construction of a magnetite processing facility and the installation of full scale underground mining operations at EHM that have resulted in a revised Ore Reserve Estimate of 72 million tonnes at a grade of 1.0% copper, 0.5 grams per tonne gold and 22% magnetite. The total tonnage represents a 600% increase over previously published underground reserves. Ore will be mined principally from a major hoisting shaft to be sunk to a depth of 1,000 metres, producing 6 million tonnes per annum of ore at full capacity.
The project will enable EHM to achieve annual production levels of approximately 50,000 tonnes of copper and 70,000 ounces of gold in concentrates from 2012 when processing from open pit mining operations ceases. Copper-gold concentrates from EHM will continue to be hauled by purpose-built trucks to Xstrata's Mount Isa copper smelter, with the anode then railed to Xstrata Copper's refinery in Townsville.
The existing concentrator at the Ernest Henry mine will be reconfigured to align with the underground mine production rate, resulting in continuous milling at lower throughput levels to deliver improved metallurgical recoveries and energy efficiencies. A separate extraction circuit will be installed to produce the magnetite concentrates.
The magnetite processing operation at EHM will produce approximately 1.2 million tonnes of magnetite per annum for export to Asia, making it Queensland's first iron ore producer.
Construction of the underground mine is expected to commence in the first half of 2010 with first production in late 2011 and full-scale operation from early 2013. Construction of the magnetite plant is also expected to commence in the first half of 2010 with commissioning expected by the beginning of 2011.
Xstrata Copper Chief Executive, Charlie Sartain, said: "This project marks an important step towards sustaining our north Queensland copper operations, that make a significant contribution to the Queensland economy.
"This is the second of five brownfield projects that Xstrata Copper is planning to move into the construction phase over the next nine months across our global operations, following the approval of the Lomas Bayas extension project in October.
"Overall, these projects form an integral part of Xstrata Copper's near-term organic growth program that will see total copper production increase by 60% to 1.5 million tonnes per annum by the end of 2014, adding significant value for all Xstrata's stakeholders."
Xstrata Copper North Queensland Chief Operating Officer, Steve de Kruijff, said: "The project will secure 400 long term jobs at the Ernest Henry site.
"The Ernest Henry Mining operation is a critical part of Xstrata Copper's integrated north Queensland operations.
"The project will ensure a sustainable future for our Ernest Henry operations and the continued supply of copper concentrate to our smelter in Mount Isa that in turn supports our refining operations in Townsville.
"It will generate an additional 330 jobs during construction and 400 full-time jobs from 2013.
"This investment decision demonstrates Xstrata's commitment to the future of north west Queensland as one of the premier mining regions of the world."
The project is dependent on final Queensland Government environmental approvals.