Nomura: Xstrata-Owned Copper Projects Moving Ahead In Peru

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SOURCE Dow Jones Newswires | 25 October 2010

LIMA -(Dow Jones)- Miner Xstrata PLC.'s purchase of the Peruvian Tintaya copper mine four years ago has opened a range of organic growth opportunities for the company, Nomura Equity Research said Monday.

Tintaya is scheduled for closure in 2012, but the nearby Antapaccay project, could deliver about 170,000 tons of copper per year when full capacity is reached in 2013.

Nomura said that cash costs at Antapaccay will be around $0.90 per pound and that, "This should mostly mitigate rising costs pressures elsewhere."

Nomura said that total capital expenditures on Antapaccay are seen at $1.47 billion, and that key crushing and milling equipment for the concentrator are already on site or en-route, adding, "The project will benefit from significant synergies from the existing Tintaya operations."

It said that more exploration has revealed a second deposit, Coroccohuayco, that will add to Antapaccay's resource base.

"Management stated that it anticipated being able to double the resource base for the mine through further drilling and exploration in the area," Nomura added.

It said that company management has given guidance of cash costs of around 60 cents a pound for the greenfields Las Bambas project, also located in southern Peru.

That project will require capital expenditures of about $.42 billion.

"However, the project will benefit from significantly better byproducts on Nomura estimates, as well as a higher ore grade (0.77% vs Antapaccay's 0.56%)," it said.

Las Bambas is expected to reach full capacity by 2015.

"Las Bambas represents a much more significant undertaking than the smaller brownfield Antapaccay project. However, management is confident that its execution strategy, experienced development team, and synergies with Antapaccay will successfully deliver this major project on time and on budget," Nomura added.

In August 2004, Xstrata obtained the exploration rights with an option to acquire and operate the Las Bambas copper deposit for $121 million.

Xstrata also has a 33.75% stake in Compania Minera Antamina SA, a copper-zinc mine in the mountains of Peru that went into commercial production in late 2001.

-By Robert Kozak, Dow Jones Newswires; 511-99927 7269;

(END) Dow Jones Newswires 10-25-10 1214ET

Copyright (c) 2010 Dow Jones & Company, Inc.

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