Monday, August 10, 2009

TNR Gold TNR.v - Will Xstrata deal on El Morro shed some light on Los Azules valuation? TNR.v, CZX.v, MAI.to, ABX, NG.TO, AUY, FCX, HUI, XAU


With recent announcement about Chinese interest in Xstrata property in Chile we have another potential catalyst for Los Azules valuation. Xstrata will have to back in by the end of August, TNR Gold TNR.v is defending its right for back in 25% on the Northern half of the property, adjacent Escorpio IV is claimed by TNR Gold to be a freehold with title registered in its name.



"Xstrata Approached Over Sale of 70% Stake in Chile Copper Mine



By Brett Foley
Aug. 10 (Bloomberg) -- Xstrata Plc, the fourth-largest copper producer, received approaches to sell 70 percent of its El Morro project in Chile that may lead to another partner joining or the company selling its interest in the mine.
“We are evaluating the approaches we have received and no decision has been made on whether or not to divest El Morro or dilute our stake,” London-based Xstrata spokeswoman Claire Divver said today in an e-mailed statement.
The Zug, Switzerland-based company may raise as much as $700 million by selling the stake, which it inherited as part of the takeover of Falconbridge Ltd. in 2006, the Independent on Sunday reported yesterday. Chinese companies are interested in buying the mine, the newspaper added.
El Morro, which is 30 percent-owned by New Gold Inc., has 489 million metric tons of measured and indicated ore resources containing 0.59 percent copper, according to Xstrata’s Web site."



All figures must be verified, but it is interesting way of thought. After Barrick Gold more then 3 billion development of Pascua Lama it will become the next catalyst for Los Azules development.



From Stockhouse:



"An interesting compraison of El Morro to Los Azules (in red) is as follows.



In summary, Los Azules is a bigger copper play, while El Morro has more a attractive gold component to it. Very similar capital costs but Los Azules has far better long term economics. With El Morro is being valued at roughly $1billion with this recent offer from the Chinese, and if you assume properties are both nearly identical in $$ opportunity, then Los Azules is worth a minimum of ~ $450 million to Minera Andes, or almost $2 a share. Somebody remind me what we're currently trading at... need I say more to justify why it is I continue to hold my shares?


Such dd sheds light on why Rob would pay $1 a share to keep Hochschild's grubby fingers as far away from our pot as possible.


- initial capital investment of $2.5 billion and $356 million in sustaining capital


- Los Azules at $2.7 billion and $704 million in sustaining capital


- 14 year mine life for a total life-of-mine (LOM) capital investment of $2.9 billion


- 24 year mine life for a total life-of-mine (LOM) capital investment of $3.5 billion


- using prices of $2.80/lb of copper and $625/oz gold, rate of return of 14.7% and a net present value of $1.1 billion when discounted at 8.0% (after tax)


- using prices of $2.80/lb of copper, $750/oz gold and $12/oz silver, internal rate of return of 23% and a net present value of $3.1 billion when discounted at 8.0% (pretax)


- the mine site operating cost is estimated at $10.55/tonne of ore, or $0.76/lb copper, after gold credits


- the mine site operating cost is estimated at $7.59/tonne of ore, or $0.85/lb copper, after gold/silver credits


- annual metal production is estimated to be 172,000 tonnes of copper and 313,000 ounces of gold over the entire 14 year LOM.


- annual metal production is estimated to be 170,000 tonnes of copper, 38,000 ounces of gold and 1.26 million ounces of silver over the entire 24 year LOM.


- annual metal production is estimated to be 203,000 tonnes of copper and 302,000 ounces of gold during our first five years of production


- annual metal production is estimated to be 213,000 tonnes of copper, 41,000 (est.) ounces of gold and 1.2 million (est.) ounces of silver during our first five years of production


- payback of the capital investment for the project occurs at 4.7 years.


- payback of the capital investment for the project occurs at 6.4 years."

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