The Oropesa project has been in development for some time. First discovered by Eurotin, it was bought by Elementos in 2018. Since then, Elementos has completed extensive exploration work, following up on electromagnetic (EM) targets with positive drilling programs.
Following a Preliminary Economic Study (PEA) – which Elementos updated in May 2020 – companies move to Pre-Feasibility Study (PFS). The results of the PFS are used to raise capital for the next stage of development. However, Elementos is looking to move quickly and take advantage of high tin prices.
So far this year, prices have risen some 56% and are approaching all-time highs. The 2020 PEA was based on a tin price of US$ 19,750/tonne. At time of writing, the LME cash price is some US$ 33,000/tonne.
Longer-term, fundamentals for tin remain strong. Demand forecasts over the next decade are positive and indicate acceleration above the historic long-term growth rate of 1.8%. However, there has been underinvestment in the tin market for over a decade, and development of more projects is required to fill the likely supply shortfall.
The 2,440-tonne annual production capacity at Oropesa is small relative to other mines and the likely supply shortfall. However, this is based on the current Mineral Resource at the project. Currently, the Oropesa project contains some 68,000 tonnes of tin, with other EM targets in the area suggesting that the resource has further room for growth. Elementos has set an exploration target of 36.5 – 51.0 million tonnes of ore at 0.46 – 0.62% Sn.
The company is currently progressing multiple works simultaneously in order to bring Oropesa online as soon as possible.
“The parallel progression of a new Mineral Resource Estimate, feasibility development programs, environmental & exploitation applications and the commencement of the DFS puts Elementos in the best possible position to develop Oropesa rapidly into a tightening tin market” commented Joe David, Elementos CEO, on the announcement of the DFS.
The company is aiming to complete the DFS by the second half of 2022, but will further refine the timescales as other work is completed.
Our view: The work completed in the 2020 PEA suggests that Oropesa could come online in around 2024 and would sit in the lower half of the tin mine cost curve. However, Elementos identified several opportunities that could lower the cash cost, including optimising the flow sheet for both oxidised ore and ultra-fine crushed material. Including a flotation circuit could recover much of the ultra-fine material, reducing the amount of tin lost to tailings.
Furthermore, there is the potential for Oropesa to grow in scale. From the size of the EM targets outside of Mineral Resource, it is estimated that some 167,900 – 316,200 tonnes of tin could be undiscovered. At the very least, this would be more than double the current resource. Elementos could either extended the 14-year mine life, or increase the annual capacity.