WARSAW, Dec 21 (Reuters) - KGHM, Europe’s No.2 copper producer, and Abacus Mining will need to invest $795 million in their joint Canadian copper and gold project Afton-Ajax, according to a feasibility study cited by KGHM on Wednesday.
The Kamloops, British Columbia-based mining joint venture, 51-percent controlled by KGHM, should launch production in 2015 and yield 50,000 tonnes of copper and 100,000 ounces of gold annually.
The study estimated the mineral resources of the projects, signed last year and seen operational for 23 years, at 512 million tonnes of ore, 70 million more than previously expected.
Production costs were seen at $1,740-2,800 per copper tonne, with benchmark copper at $7,440 per tonne.
KGHM has 90 days to decide if it still wants to run the project and raise its stake to 80 percent, with the maximum price for the additional share capped at $35 million.
“Works are ongoing on the optimal financing project,” KGHM said. “If we decide to enter the investment stage, the project would be financed with credit in at least 50 percent. Most of the expenditures are planned for 2013-14.”
Earlier this month, the state-controlled Polish miner agreed another Canada deal — the C$3 billion ($2.9 billion) purchase of Canadian rival Quadra FNX.
KGHM is looking at five more takeover targets abroad, as it aims to raise its annual copper output to 700,000 tonnes by 2018. ($1 = 1.0281 Canadian dollars) (Reporting by Adrian Krajewski; Editing by Dan Lalor)