Northern Orion eyes 2010 Agua Rica startup

Vancouver-based Northern Orion (TSX: NNO) aims to have its Agua Rica copper-gold-molybdenum project in northwest Argentina in production by 2010, company CEO David Cohen said Tuesday. "It's [Agua Rica] really going to ramp us up by a number of orders of magnitude into a substantial producer of cash, copper and gold as well as moly going forward," said Cohen during a 2005 financial results webcast. Northern Orion is on track to complete a bankable feasibility study by mid-2006 at open pit Agua Rica with construction earmarked to start in early 2007, said Cohen. The feasibility study is looking at a mine operation of 90,000t/d with output of 150,000t/y copper, 150,000oz/y gold and 12Mlb-14Mlb/y (5,400-6,400t) molybdenum over a 25-30 year mine life, said Cohen. This is a change from the previously reported 70,000t/d operation of over 30 years but Cohen would not reveal current capital cost estimates. In June 2005, the company forecast capital costs of US$1bn to build the mine. "Capital and operating costs will be finalized over next three months," said Cohen. Northern Orion is talking to a group of 10-12 banks that have showed "significant" interest in debt financing Agua Rica and with 4-5 export credit groups, said Cohen. A 70:30 debt/equity financing package is due to be in place by year-end, he said. PARTNERS The Agua Rica feasibility study is based on a standalone, independent project, stressed Cohen. However, once the study is complete, potential synergies could be discussed with the Alumbrera copper-gold mine, 34km away, he said. "There are a number of areas where there may be benefits to talking to our partners at Alumbrera," said Cohen. Northern Orion has 12.5% of Alumbrera, which is operated and 50%-controlled by Swiss resource group Xstrata. Cohen said that although Northern Orion had no need of a JV partner from a financial or operating perspective, the company still has considered offers. "We have been approached by a number of people who would like to participate in one way or fashion and we evaluate each of those," he said. "There are some interesting ones out there and there could be some potential that would bring some benefit to the project but nothing has been signed and sealed," continued Cohen. At a 0.2% cutoff grade of copper, a June 2005 Agua Rica resource estimate calculated measured and indicated resources of 1.46Bt grading 0.44% copper, 0.03% molybdenum and 0.19g/t gold for 6.4Mt of copper, 8.9Moz of gold and 437,263t of moly. Inferred resources provide an additional 972Mt containing 3.5Mt copper, 4.4Moz gold and 349,719t of molybdenum.