TORONTO (miningweekly.com) – TSX-listed Petaquilla Minerals on Monday said that it was in discussion with base metals miner First Quantum Minerals regarding the relationship between the two companies with neighbouring projects in Panama, to ensure the development of the $6.425-billion Cobre Panama copper project was optimised.

Petaquilla revealed that negotiations were centred around a consolidation of the district around the Cobre Panama project, with Petaquilla continuing its gold mining operations at the Molejon concession, and First Quantum becoming entitled to all the adjacent concession areas so that it had outright ownership and control of all of the areas necessary for access, infrastructure, development and expanding the Cobre Panama project.

The negotiations sought to amend a previous agreement between the two firms and would entail First Quantum buying certain selected assets from Petaquilla so that there is a complete separation of the two operations.

In February last year, at about the same time that Vancouver-based First Quantum started its $5.1-billion hostile takeover bid for Inmet Mining, Inmet and Petaquilla had reached a $150-million commercial agreement for the companies’ projects in Panama.

Under the agreement, the two companies had resolved a number of issues related to aggregate procurement, land access and use, settlement of certain claims, waiving of royalties to be received by Inmet, and camp site procurement for the mutual benefit of Inmet subsidiary Minera Panama’s and Petaquilla's mining operations, in the district of Donoso, Panama.

Petaquilla and Inmet, former joint venture partners, had successfully negotiated other arrangements in the past, namely the 2005 Molejon gold project agreement, which led to Petaquilla's gold mining operations at its Molejon gold deposit.

COBRE PANAMA

The Cobre Panama project, which First Quantum acquired in March 2013 from Inmet, has been reviewed using Canadian National Instrument 43-101, revealing compliant measured and indicated resources of 3.271-billion tonnes inclusive of reserves.

The revised project would have an installed capacity of about 70-million tonnes a year for the first ten years. This is 17% higher than the Inmet plan. Further expansion of up to 100-million tonnes a year is being considered.

Based on the current resource estimate and the planned installed capacity of 70-million tonnes a year, the project would produce an average of about 320 000 t/y of copper on a life-of-mine (LoM) basis, which is about 20% higher than the Inmet plan.

Average yearly LoM by-product production is estimated at 100 000 oz of gold; 1.8-million ounces of silver and 3 500 t of molybdenum.

Cobre Panama is expected to have a mine life of 34 years.

The re-engineered and larger project is scheduled for construction completion and commissioning in the second half of 2017.

According to First Quantum, the project has transformed from an outsourced approach to a complete in-house, self-perform arrangement where third-party engineers and contractors are used only for identified specific tasks and work within the company's preferred project execution model.

The earthworks and the methodology of subsequent excavation and construction have been critically reviewed. The company has bought significant quantities of on-site equipment from contractors whose contracts have either been cancelled or modified. This allows First Quantum to fully control all site-development activities, which provides for greater flexibility and significantly reduced risk.

Site accommodation, road access, communications and management are all fully functional, enabling the major activities to advance efficiently.

The locations of key site infrastructure, including the processing facilities, have been reviewed and an alternate, more practical plant site has been selected, which should be more cost effective to construct and allow for better access to the proposed in-pit crushing and conveyor systems for life-of-mine pits, and to the main access road.