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Key takeaways:
The Vicuña project, held through Vicuña Corp., a 50-50 joint venture between Lundin Mining and BHP, spans the border of Argentina and Chile and comprises the Filo del Sol and Josemaria deposits. The project is envisioned in three stages, with first copper concentrate production targeted from the Josemaria deposit, with material to be trucked to a Chilean port for export to global smelting facilities.
Stage 3 expands the concentrator, targeting peak average production of 508,000 tonnes of copper per year over a ten-year period. Stage 2 introduces heap leach facilities at Filo del Sol for oxide material, producing copper cathode and gold-silver dore via solvent extraction and electrowinning.
Over the first 25 years of operation, the project is projected to produce an average of 395,000 tonnes of copper, 711,000 ounces of gold and 22.2 million ounces of silver per year, according to the preliminary economic assessment (PEA).
Over its full 70-year mine life, the Vicuña district is estimated to hold measured and indicated resources of 14.3 million tonnes of copper, 36.1 million ounces of gold and 729 million ounces of silver, with inferred resources of a further 32.3 million tonnes of copper, 61.3 million ounces of gold and 1,051 million ounces of silver, according to a separate resource update published by Lundin Mining on February 18.
Lundin Mining also reported on February 18 that its measured and indicated copper mineral resources had increased by 37% year on year on a 100% consolidated basis to 28,372 kilotonnes, driven primarily by the updated resource estimate at Filo del Sol. Inferred resources rose by 863% over the same period.
Stage 1 initial capital is estimated at $7.1 billion, with total capital across all three stages of $18.1 billion and life-of-mine sustaining capital of $30.3 billion over 70 years. The base-case after-tax net present value at an 8% discount rate is $9.5 billion, based on copper at $4.60 per lb, gold at $3,300 per troy ounce and silver at $40 per troy ounce, with an after-tax internal rate of return of 14.8%, according to the company.
Both precious metal assumptions sit well below current market levels. COMEX Gold M3 (May 26) settled at $5,245.90 per troy ounce on Wednesday February 25, while COMEX Silver M3 (May 26) settled at $91.63 per troy ounce on the same day, 59% and 129% above the PEA’s respective base-case assumptions.
Jack Lundin, president and chief executive officer of Lundin Mining, said the results represented a significant milestone for the project. “The progress achieved since the formation of Vicuña Corp. has been exceptional and this study establishes a solid foundation for moving the project forward while continuing to refine later stages and drive further improvements in cost, schedule and production.”
Japan’s Pan Pacific Copper and Lundin Mining agreed to broadly roll over 2025 commercial terms for 2026, with treatment and refining charges effectively remaining flat, according to media reports in mid-December.
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The PEA’s economic modelling assumed treatment and refining charges (TC/RCs) of $70 per dry metric tonne, a figure that stands in stark contrast to current spot market conditions.
Fastmarkets’ copper concentrates TC index, cif Asia Pacific — the midpoint between smelter and trader buying levels — was assessed at $(79.90) per tonne on Friday February 20, 292% more negative than $(20.40) per tonne on February 21, 2025.
It should be noted that these are spot prompt market assessments and are not directly comparable with the long-term offtake assumptions embedded in the PEA’s financial model, which are based on expected contracted terms over a multi-decade mine life rather than current spot levels.
Looking ahead, Fastmarkets principal analyst Andy Cole said the TC index faced a risk of new spot lows in early 2026, with the 2026 annual benchmark having settled around zero, the lowest on record.
Cole noted the possibility of a gradual index recovery later in the year if smelter capacity reductions materialize but said there was no return to positive territory in sight over the near term.
Concentrate from the Filo del Sol deposit is expected to carry elevated arsenic levels, which Lundin Mining said would necessitate the construction of a dedicated roasting plant as part of Stage 3. The roasting facility is designed to process 1.3 million tonnes of concentrate per year across two independent lines, with the resulting calcine expected to be marketable, according to the company. The concentrate grade across the project is approximately 27% copper.
Elsewhere in Argentina’s copper pipeline, PSJ Cobre Mendocino said it was advancing an update to its feasibility study. The project, located in Uspallata in the province of Mendoza and led by Switzerland’s Zonda Metals and Argentina’s Alberdi Energy, targets annual production of 40,000 tonnes of fine copper in concentrate, according to local media.
The company also announced it had signed an agreement with energy distributor Distrocuyo for the construction of a 220/33 kV transformer station and a new 220 kV high-voltage line connecting to the Mendoza Norte transformer station, infrastructure PSJ described as a key milestone toward becoming the first copper project to enter the development stage in Argentina.
“From PSJ we reaffirm our commitment to Mendoza and to the development of its productive fabric,” chief executive officer Fabián Gregorio said. “Except for certain specific cases, we aim for at least 90% of contracts to be executed with Mendoza-based companies, prioritizing capability and experience.”
Marex analyst Ed Meir told Fastmarkets on Monday that copper’s exposure to the Gulf disruption was more limited than for other commodities.
“I know [Iran has] significant reserves and produce quite a bit of metal,” Meir said. “Unlike oil and aluminium, copper is not as supply-stressed in terms of Gulf shipments, even if you take out Iranian production. Right now it’s a moot point about price impact — nothing is going in and out of the Gulf anyway.”
The trader echoed this view, saying he did not think the volumes involved were “significant enough to move the dial on the copper price.”
But the trader cautioned that the duration of the conflict would be the determining factor. “If [the] war only lasts a few weeks, then everything opens up again — you can get stuff to Jebel Ali, then fine. But if the war goes on for six, eight, twelve weeks — or a year — it becomes an issue.”
The London Metal Exchange copper cash price was $12,959 per tonne on Wednesday March 4, down from $13,229.50 per tonne on March 2 — the day the strait was declared closed.
Other US market participants urged caution in drawing conclusions too early.
“I think at this point there is too much uncertainty about the entire situation, so I would hesitate to even guess about the implications. Let’s give it a week and see what happens,” John Gross, consultant and publisher of The Copper Journal, told Fastmarkets on Tuesday.
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