Ok, here's a bit of a gauge in this regard. Ok Tedi mine in PNG is a well established player in the region for just over 25 years now by a little company called BHP.
I think a company with this kind of expertise will have cost efficiency down pat over 25 years.
As of 2006, Ok Tedi production cost per lb of Cu is
$US 0.86 for the year at a grade of
0.9% Cu.
[Source:
http://www.inmetmining.com/site/Inmet_129/pdf/2006_Annual_Report_Ok Tedi.pdf
Page 56]
Let's forget about the infrastructure required to bring copper heap leaching etc. to reality for a moment.
The lower grade will undoubtedly have a greater cost of production, but how much is anybodies guess.
For discussion sake I will add to 0.86;
+50% for half grade copper (have to physically mine double the ore for the same output. Could have added 100% theoretically, but that is unfair as economies of scale will kick in)
+10% for BHP's expertise that FNT do not have in terms of cost efficiency in mining.
+2% as general costs of production, i.e. labour are rising in the region, as per Ok Tedi report.
0.86 x1.62 =
$1.39 per lb.
At $2/lb or less will the margin
still be economic?
Thats what I'm pondering, and am open to all discussion.