en.Wedoany.com Reported - The Sierra Gorda joint venture (JV) in Chile has completed a feasibility study and formally approved the implementation of the fourth grinding line project. This $725 million plant expansion is expected to deliver substantial economic returns.
Sierra Gorda is a large open-pit copper mine located in the Atacama Desert, 60 kilometers southwest of Calama, Chile. KGHM Polska Miedź S.A. holds a 55% stake in the joint venture, with South32 Ltd. holding the remaining 45%.
The expansion project plans to increase Sierra Gorda's processing capacity from approximately 48 million metric tons per year to about 60 million metric tons per year by installing a fourth grinding line, expanding crushing and flotation capacity, and constructing related process infrastructure. The project is expected to achieve first production by the end of 2029, with full capacity reached in the first half of 2030.
Upon commissioning, Sierra Gorda's average annual payable production is expected to reach approximately 195,000 tons of copper, about 6,000 tons of molybdenum, roughly 58,000 ounces of gold, and around 1.7 million ounces of silver, representing a copper-equivalent production increase of about 30% compared to current levels. The capacity increase is also expected to reduce average operating unit costs by approximately 10%.
KGHM Vice President Anna Sobieraj-Kozakiewicz stated that Sierra Gorda is an asset with significant production potential, and this investment will help the company better leverage its capabilities to create long-term value. The project aligns with the company's latest discoveries in the Catabela Northeast exploration area, which contains ore reserves that could significantly extend the mine's effective life.
Based on the feasibility study, the project is expected to achieve an internal rate of return of approximately 20% at a long-term copper price of $5 per pound, and approximately 23% at a long-term copper price of $6 per pound. Project funding will come from operating cash flows and debt financing from the Sierra Gorda joint venture.
