FQM’s Taca Taca Project Doubles in Value on Higher Reserves and Stronger Copper, Gold Prices
First Quantum’s Taca Taca Copper-Gold Project in Argentina Posts $5.9B NPV as Reserves and Prices Lift Valuation
A new technical report on First Quantum Minerals’ Taca Taca copper-gold project in northwest Argentina shows the asset’s value has more than doubled in five years, supported by increased reserves and stronger long-term copper and gold price assumptions.
Under an 8% discount rate and base-case prices of $4.50 per lb. copper and $3,000 per oz. gold, Taca Taca carries an after-tax net present value (NPV) of $5.92 billion and an internal rate of return (IRR) of 19.3%, the company said.
This compares with a March 2021 study that outlined an after-tax NPV of $2.36 billion and an IRR of 15.3%.
BMO Capital Markets analyst Matthew Murphy described Taca Taca as an attractive project for First Quantum in a research note released Friday.
Strategic Importance in Argentina
Taca Taca is among several large-scale mining developments that Argentina is relying on to boost economic output and narrow the production gap with neighboring Chile, the world’s largest copper producer.
The project is also strategically significant for First Quantum as it works to offset the impact of the suspension of operations at Cobre Panama, formerly its flagship asset, following government action in Panama.
Capital Costs and Development Plan
The project is designed as a large-scale open-pit operation with an initial processing capacity of 40 million tonnes per year. Initial capital expenditure is estimated at $4.2 billion. An expansion to 60 million tonnes per year beginning in year five would require an additional $1 billion in capital.
The 2021 technical study did not provide comparable construction cost estimates.
Increased Reserves and Mine Life
Located in the Puna region of Salta province at an elevation of approximately 3,500 metres, Taca Taca is about 230 km west of the city of Salta and 55 km east of the Chilean border. There are no local communities within or immediately adjacent to the project footprint.
Updated proven and probable mineral reserves total 1.99 billion tonnes grading 0.42% copper, 0.01% molybdenum and 0.09 g/t gold. These reserves support a 35-year open-pit mine life.
Contained metal amounts to:
-8.43 million tonnes of copper
-244,400 tonnes of molybdenum
-5.53 million ounces of gold
Compared with the 2021 technical report, combined proven and probable reserves have increased by 13%, while in-situ copper and gold metal content have each risen by 9%.
The company noted that mineralization remains open at depth and locally along the southern and eastern margins of the deposit.
Production Profile and Costs
Average annual production during the first 10 years is projected at 291,000 tonnes of copper and 133,000 ounces of gold, with cash costs estimated at $0.97 per lb. of copper.
Over the full 35-year mine life, average annual output is expected to be 209,000 tonnes of copper and 96,000 ounces of gold, at cash costs of $1.26 per lb.
Financing and Regulatory Pathway
First Quantum intends to apply for financing under Argentina’s large investment incentive regime, known as RIGI, introduced by President Javier Milei. The program targets mining and energy investments exceeding $200 million.
Following a recent extension of the RIGI application deadline to July 2027, Scotia Capital analyst Orest Wowkodaw indicated that material project spending is unlikely to begin before 2028.
The company expects to receive environmental and social impact assessment approval from Argentina’s Mining Secretariat in the first half of this year, subject to completion of the public consultation process.
Portfolio Optionality
Chief executive Tristan Pascall said the updated technical study reinforces Taca Taca’s status as a large-scale, long-life copper project with meaningful gold by-product production and a competitive position on the global cost curve. He described it as one of the world’s premier undeveloped copper assets.
First Quantum said it will evaluate any construction sanction decision in a disciplined manner, taking into account financing arrangements, balance sheet strength and the status of its broader operating portfolio.
Analysts suggest that Taca Taca is unlikely to be sanctioned before a resolution and full restart at Cobre Panama. However, they view the Argentine project as providing compelling medium-term copper growth optionality.
First Quantum shares rose 3% to C$37.48 in morning trading in Toronto, giving the company a market capitalization of approximately C$31 billion ($22.8 billion).
