First Quantum estimates the value of the Argentine copper mine at $5.9 billion. 

View of the Taca Taca project area. Photo: First Quantum.

A new technical report on First Quantum Minerals' (TSX: FM) Taca Taca copper-gold project in northwestern Argentina shows the project's value has more than doubled in five years, thanks in part to increases in reserves and commodity prices.

Assuming a discount rate of 8%, a copper price of $4.50 per pound and a gold price of $3,000 per ounce, Taca Taca's after-tax net present value is $5.92 billion and an after-tax IRR of 19.3%, First Quantum said in a statement late Thursday. This compares to a net present value of $2.36 billion and an internal rate of return of 15.3% calculated in the March 2021 study.

“We believe Taca Taca is an attractive project for First Quantum,” BMO Capital Markets analyst Matthew Murphy said in a note Friday.

Taca Taca is one of several mining projects Argentina is counting on to boost economic output and close the gap with neighboring Chile, the world's leading copper producer. It will also help First Quantum, which is working to recover from the Panamanian government's closure of the Cobre Panama copper mine, its main asset.
Developing Taka-Taka as an open-pit mine with an initial processing capacity of 40 million tons per year would cost approximately $4.2 billion, First Quantum estimates. Expanding capacity to 60 million tons starting in the fifth year of operation would cost another $1 billion. The 2021 First Quantum study did not provide construction cost estimates.
Increasing inventory
Located in the Puna region of the Salta province of Argentina, Taca Taca is at an altitude of 3,500 meters, approximately 230 km west of the city of Salta and 55 km east of the Chilean border. No local population lives within or near the project area.
According to First Quantum, updated proven and probable reserves total 1.99 billion tonnes grading 0.42% copper, 0.01% molybdenum and 0.09 grams gold per tonne, providing a mine life of 35 years. The metal content is 8.43 million tons of copper, 244,400 tons of molybdenum and 5.53 million ounces of gold.
This represents a 13% increase in total proven and probable reserves, a 9% increase in in-ground copper grade and a 9% increase in in-ground gold grade compared to the 2021 technical report. According to First Quantum, mineralization remains open at depth and locally along the deposit boundaries to the south and east.

Annual production for the first 10 years is 291,000 tons of copper and 133,000 ounces of gold at a production cost of 97 cents per pound. Life-of-mine production is projected to be 209,000 tonnes of copper and 96,000 ounces of gold at a production cost of $1.26 per pound.
First Quantum plans to apply for funding under Argentina's RIGI large investment incentive program in the coming months. The RIGI program, created by populist conservative President Javier Milei, targets mining and energy projects with an investment of more than $200 million.

“Due to the recent extension of the RIGI program application deadline to July 2027, we do not expect significant investment in this project to begin until 2028,” Scotia Capital mining analyst Orest Vovkodav said in a note Friday.

Significant value
First Quantum expects the project to receive approval from the Ministry of Mines in the first half of this year following public consultation.
The updated technical study "confirms the significant value and potential of the project as a large, long-term copper mine with significant gold production and a competitive position on the global cost curve," CEO Tristan Pascal said in a statement. He called Taca Taca "one of the world's leading undeveloped copper assets."
First Quantum will evaluate a future sanction decision on Taca Taca "in a disciplined manner, taking into account the financing plan, the company's balance sheet and the health of its other operations," Pascal added.
Those other operations include Cobre Panama, which the company hopes to reopen after the Panamanian government announced a more lenient stance.

The updated technical study "confirms the significant value and potential of the project as a large, long-term copper mine with significant gold production and a competitive position in the global market." “While we do not expect the [Taca Taca] mine to be approved any time soon, and certainly not until an agreement is reached and full resumption and ramp-up of production at Cobre Panama commenced, Taca Taca provides an attractive medium-term opportunity for copper production growth,” Vovkodav said.
First Quantum shares rose 3% to C$37.48 on Friday morning in Toronto, increasing the company's market capitalization to about C$31 billion ($22.8 billion).