Lumina Copper Announces Positive Result of Preliminary Economic Assessment on Taca Taca Project, Argentina

Tue Apr 9, 2013 8:00am EDT

* Reuters is not responsible for the content in this press release.

  VANCOUVER, BRITISH COLUMBIA, Apr 09 (Marketwired) --
Lumina Copper Corp ("Lumina") (TSX VENTURE:LCC) is pleased to announce
the results of a Preliminary Economic Assessment (the "PEA" or the
"Study") on its 100% owned Taca Taca copper/gold/molybdenum project
located in the Puna region of Salta Province in northwestern Argentina.
The results of the PEA show that a mining and sulfide concentrating
operation at Taca Taca (the "Project") has favourable economic potential
generating, at an 8% discount rate and $2.75/lb copper price, an
estimated after tax net present value ("NPV") of $2.1 billion and an
estimated after tax internal rate of return ("IRR") of 17.2%.

    The PEA has evaluated the merits of constructing a mine and concentrator
at Taca Taca to produce copper (including a gold by-product) and
molybdenum concentrates. The Study was based upon a mine operating over a
28 year mine life delivering 120,000 tonnes per day of throughput (for an
initial period of seven years) to an industry standard designed mill and
concentration plant comprising two mill and flotation lines. An expansion
of the concentrator, by way of a third line, to accommodate a total
throughput of 180,000 tonnes per day from year eight onwards has been
included in the evaluation.

    Highlights of the Study's various estimates are as follows: 


--  Robust Project economics driven by a large mineral resource base, a
    higher grade starter pit (average plant feed grade of 0.72% copper for
    the first seven years of operation) and excellent regional
    infrastructure (railway line, available power and port) supporting a
    lower than average capital intensity ratio on initial capital.
      
--  An estimated after tax NPV of $2.1 billion, at an 8% discount rate, and
    an estimated after tax IRR of 17.2%.
      
--  Assumed long term metal prices of $2.75/lb copper, $1,200/oz gold and
    $12/lb molybdenum.
      
--  Average life of mine ("LOM") copper production of approximately 244,000
    tonnes per year over a 28 year mine life. LOM gold production will
    average 110,000 ounces per year, while molybdenum production will
    average 4,100 tonnes per year. Copper production over the first seven
    years of the mine's life will average 271,000 tonnes per year with a
    peak in year two of 349,000 tonnes of copper.
      
--  C-1 LOM cash costs (net of by-product credits) estimated to average
    $1.11 per pound of copper sold.
      
--  Initial capital of $3.0 billion and total LOM sustaining capital of $1.8
    billion. The sustaining capital includes the addition of a third mill
    and flotation line and associated infrastructure and equipment to the
    concentrator during the sixth and seventh years of production ($431
    million).
      
--  A capital intensity ratio on initial capital of $11,090 per tonne of
    average annual copper produced for the first seven years of production.
      
--  Capital payback on initial capital is expected to be 3.8 years after
    production begins.
      
--  The Project is expected to generate approximately 1,100 full-time jobs.
    During the initial four years of pre-production, including 30 month
    concentrator construction period, approximately 1,300 direct jobs will
    be generated.
      
--  The Project will potentially generate $9.5 billion in taxes and
    government royalties payable to the Argentine and Salta governments.


    The salient details of the PEA are summarized in the table below:


----------------------------------------------------------------------------
NPV (8% discount rate)                                          $2.1 billion
----------------------------------------------------------------------------
IRR                                                                    17.2%
----------------------------------------------------------------------------
Metal Prices                                                     $2.75/lb Cu
                                                                $1,200/oz Au
                                                                   $12/lb Mo
----------------------------------------------------------------------------
Initial Capital Expenditure                                     $3.0 billion
----------------------------------------------------------------------------
LOM Total Sustaining Capital Expenditure                        $1.8 billion
----------------------------------------------------------------------------
LOM C-1 Cash Costs (net by-product credits)                 $1.11/lb Cu sold
----------------------------------------------------------------------------
LOM Average Annual Metal Production                              244,000t Cu
                                                                110,000oz Au
                                                                   4,100t Mo
----------------------------------------------------------------------------
LOM Strip Ratio                                                       1.57:1
----------------------------------------------------------------------------
Mine Life                                                           28 years
----------------------------------------------------------------------------


    Note: The PEA is preliminary in nature and includes the use of inferred
mineral resources that are considered too speculative geologically to
have the economic considerations applied to them that would enable them
to be categorized as mineral reserves. Thus, there is no certainty that
the PEA will be realized. Actual results may vary, perhaps materially.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.

    Lumina will host a conference call on Tuesday, April 9th, 2013 at 11:00
am (Pacific Time) or 2:00 pm (Eastern Time) to discuss these results.
Call-in information is provided at the end of this news release. 

    The PEA was supervised by Kevin Scott P.Eng., an independent qualified
person. Mr. Scott has reviewed and approved the contents of this news
release. The PEA was managed by MTB Project Management Professionals,
Inc. (project management, infrastructure, ancillary capital and operating
costs and cash flow modeling) and comprised several studies prepared by:
SIM Geological Inc. and BD Resource Consulting, Inc. (mineral resource
estimate and model, quality assurance, quality control program); CH
Plenge & Cia S.A. (metallurgical and ARD test work); Wyllie & Norrish
Rock Engineers Inc. and Fisher & Strickler Rock Engineering, (rock
mechanics and pit slope design); WLR Consulting, Inc. (mine plan,
production schedule, mining capital and operating costs); Ausenco
(process engineering, infrastructure, capital and operating costs); TFP
Construcciones SRL (rail study, capital and operating costs); Ausenco
(tailings and waste rock storage, hydrogeology, capital and operating
costs); Hugo Gil Figueroa & Asociados (power supply capital and operating
costs); Schlumberger (water treatment capital and operating costs); H&H
Metals Corp. (marketing study); RungePincockMinarco (metallurgical and
mining peer reviews); Gochnour & Associates, Inc. (environmental
management); and Social Capital Group (socioeconomic studies). 

    The National Instrument 43-101 technical report summarizing the results
of the PEA will be available on the Lumina's website
(www.luminacopper.com) and SEDAR (www.sedar.com) by May 25, 2013.

    Project Economics

    A cash flow valuation model for the Project has been developed based upon
the geologic and engineering work completed to date for the PEA. The
model was developed using a long term forecast copper price of $2.75/lb.
This price forecast is consistent with the current, consensus long term
price forecast of $2.89/lb copper made by 21 banking analysts (source:
Thomson One Analytics, March 2013). In addition, long term by-product
metal prices of $1,200/oz gold and $12/lb molybdenum were used. 

    The following table shows the estimated after tax NPV for the Project's
cash flows at various discount rates:


----------------------------------------------------------------------------
Discount Rate                                                            NPV
(Real)                                                            (millions)
----------------------------------------------------------------------------
4%                                                                    $4,610
----------------------------------------------------------------------------
6%                                                                    $3,120
----------------------------------------------------------------------------
8%                                                                    $2,090
----------------------------------------------------------------------------
10%                                                                   $1,350
----------------------------------------------------------------------------
12%                                                                     $820
----------------------------------------------------------------------------


    The following figure shows the sensitivity of the estimated after tax NPV
(8% discount rate) and estimated after tax IRR to changes in the copper
price: 

    To view the figure associated with this release, please visit the
following link: http://media3.marketwire.com/docs/lcc409i.jpg 

    Mineral Resources

    The most recent mineral resource estimate for the Project (effective date
of October 30, 2012) completed by Sim Geological Inc. and BD Resource
Consulting, Inc., and the corresponding block model, has been used to
develop the mine plan and production schedule for the PEA. 

    The Project's current mineral resource estimate (at a 0.3% copper
equivalent cutoff grade) is shown in the table below:


----------------------------------------------------------------------------
Size(1)                      Grade                     Contained Metal      
----------------------------------------------------------------------------
Tonnes         CuEq(3)       Cu       Au       Mo       Cu       Au       Mo
(Million)          (%)      (%)    (g/t)      (%)   (B lb)   (M oz)   (M lb)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             Indicated Resources                            
----------------------------------------------------------------------------
2,165             0.57     0.44     0.08    0.013    21.15     5.56    615.8
----------------------------------------------------------------------------
                            Inferred Resources(2)                           
----------------------------------------------------------------------------
921               0.47     0.37     0.05    0.012     7.55     1.57    235.4
----------------------------------------------------------------------------
Notes:                                                                      
                                                                            
(1) Mineral resources have been estimated as at October 30, 2012. Totals may
    not add up due to rounding.                                             
(2) Inferred mineral resources have a great amount of uncertainty as to     
    their existence and as to whether they can be mined legally or          
    economically. It cannot be assumed that all or any part of inferred     
    mineral resources will ever be upgraded to a higher category.           
(3) Copper equivalent (CuEq) calculated using $2.00/lb Cu, $800/oz Au and   
    $12.00/lb Mo and is not adjusted for mining and metallurgical recoveries
    as these remain uncertain. The formula used is as follows: CuEq = Cu% + 
    (Au g/t x 0.583) + (Mo% x 6).                                           


    The Project's quality assurance/quality control ("QA/QC") program was
monitored by independent consultant Dr. Bruce M. Davis, FAusIMM of BD
Resource Consulting, Inc. Logging and sampling were completed at Lumina's
secure facility located at the Project. Drill core was mechanically split
on site before being sent to either ALS Chemex's or Alex Stewart
Argentina's preparation facilities in Mendoza, Argentina. Lumina
established a QA/QC protocol that comprised the use of reject duplicates,
standards, and blanks inserted into the sample batches at regular
intervals. Fine material duplicates were inserted during sample
preparation (independent from the assay laboratory) by splitting of the
pulps. A range of copper-gold-molybdenum standard reference materials
(SRMs) of suitable matrix composition, together with blanks, were
inserted by Lumina during the core sampling procedure. The structure of
this QA/QC program follows accepted industry standards. Irregular or
suspect results were addressed in a timely manner in order to ensure the
integrity of the database. The results of this QA/QC program indicate
that the Project's database of sampling, analytical and test data is of
sufficient accuracy and precision to be used for the generation of
mineral resource estimates.

    Floating cone analyses were used at varying copper prices to determine
the best sequence for potential economic development. The floating cone
run used for the ultimate pit was based on a copper price of $2.00/lb,
gold price of $1,100/oz, and a molybdenum price of $12/lb. The resulting
pit limits were then used to develop the Project's mine plan and
production schedule, as well as total waste. This mine plan resulted in a
LOM stripping ratio of 1.57:1. 

    The following table shows the classification of the mill feed that forms
the basis for the mine plan and production schedule used in the PEA:


----------------------------------------------------------------------------
                       Classification of Mill Feed - PEA Production Schedule
                ------------------------------------------------------------
                         Tonnes             Cu             Mo             Au
Classification       (Millions)            (%)            (%)          (g/t)
----------------------------------------------------------------------------
Indicated                 1,545           0.46          0.013           0.09
----------------------------------------------------------------------------
Inferred                    106           0.43          0.005           0.09
----------------------------------------------------------------------------


    The oxide gold mineral resource estimate defined within the Project's
leached cap was treated as waste in the PEA production schedule.
Metallurgical test work completed to date on the oxide gold resource has
been limited. Preliminary test results indicate, however, that future
studies should be considered and performed in sufficient detail to
support an economic analysis. 

    Mining & Processing

    The proposed Project will utilize conventional open pit mining methods
and assumes a concentrator throughput of 120,000 tonnes per day (43.2
million tonnes per year) for an initial seven year period. In year eight,
production is forecast to increase to 180,000 tonnes of throughput per
day (64.8 million tonnes per year), with the addition of a third mill and
flotation line, for the remaining 21 years of the mine's life. The
increase in throughput corresponds with a decline in head grade as higher
grade supergene mineralization is replaced by lower grade primary
mineralization as the predominant material mined.

    Mineralized material will be trucked from the open pit to two primary
crushers located outside the pit before being conveyed to the coarse ore
stockpile ahead of two semi-autogenous grinding and ball mill lines
(three lines from year 8 onwards). Thereafter, material will be
concentrated using conventional copper and molybdenum flotation
technologies to produce a copper concentrate containing gold as a
by-product and molybdenum concentrate. Based on the metallurgical test
work completed to date, LOM metal recoveries are expected to be
approximately 90% for copper, 64% for gold and 57% for molybdenum. 

    Concentrate Transportation 

    Both copper and molybdenum concentrates will be transported by rail from
the Project to the port of Mejillones, near Antofagasta, in Chile for
export by ship to Asian customers (the molybdenum concentrates are
assumed to be sold in Chile). The railway line connecting Antofagasta and
the city of Salta is located approximately ten kilometers from the
Project. The railway line has the capacity to handle the transportation
of all of the concentrates produced at the Project and the construction
of a loading facility and rail spur near the concentrator has been
included as part of the capital cost estimate. It has been assumed that
the Project will operate its own fleet of locomotives and rolling stock
to transport the concentrates and consumables between the mine site and
port. 

    Capital Cost Estimates

    Capital cost estimates for the Project have been completed. As previously
discussed, the concentrator will begin operations with two milling and
flotation lines before a third line is added and begins operation in year
eight. Approximately 242 million tonnes of preproduction stripping will
be required prior to mining operations commencing. It has been estimated
that it will take approximately 2.5 years to complete preproduction
stripping at a capitalized cost of $416.1 million The cost of
preproduction stripping, including removal of the leach cap, has been
included in the initial capital cost estimate.

    The following table summarizes the capital cost estimates in the PEA: 


----------------------------------------------------------------------------
                                                                   Estimate 
Description                                                       (millions)
----------------------------------------------------------------------------
Mine                                                                  $581.5
----------------------------------------------------------------------------
Preproduction stripping                                               $416.1
----------------------------------------------------------------------------
Plant and Processing                                                  $685.5
----------------------------------------------------------------------------
Infrastructure                                                        $215.3
----------------------------------------------------------------------------
Tailings Dam and Waste Rock Storage                                   $139.5
----------------------------------------------------------------------------
Other                                                                 $581.0
----------------------------------------------------------------------------
Contingency                                                           $386.5
----------------------------------------------------------------------------
  Total                                                             $3,005.5
----------------------------------------------------------------------------
Startup Working Capital                                                $54.9
----------------------------------------------------------------------------
Capital costs for 3rd mill and flotation line and                           
associated ancillary costs                                            $431.2
----------------------------------------------------------------------------
LOM Sustaining Capital Costs                                        $1,375.5
----------------------------------------------------------------------------
Note: Figures above may not add up due to rounding.                         


    The capital cost estimates have been compiled with an accuracy level of
-25% to +35%. 

    The initial capital cost estimate for the Project in the PEA compares
favourably to the initial capital costs cited for comparable copper
projects under development. The capital intensity ratio on initial
capital (initial capital divided by average annual copper production) is
a measure of the amount of investment in initial capital infrastructure
required to produce a tonne of copper at a project. The Project's capital
intensity ratio on initial capital is estimated to be $11,090/tonne of
copper production (for production prior to the expansion in year eight).
The term "capital intensity ratio" does not have a standard meaning and
may not be directly comparable to capital intensity ratios presented by
other issuers.

    Operating Cost Estimates

    The PEA estimates that the C-1 cash costs (net of by-product credits)
over the life of the mine will average $1.11/lb copper sold. C-1 cash
costs include at-mine cash operating costs, treatment and refining
charges, royalties, mine reclamation and closure costs, and copper and
molybdenum concentrate transportation and freight costs.

    The following LOM operating costs have been forecast for the Project:


----------------------------------------------------------------------------
Site Operating Costs (per tonne of mineralized                              
 material mined and fed to the concentrator)                                
----------------------------------------------------------------------------
  Mining                                                               $4.67
----------------------------------------------------------------------------
  Processing                                                           $4.26
----------------------------------------------------------------------------
  Infrastructure Maintenance                                           $0.06
----------------------------------------------------------------------------
  Railroad Operations                                                  $0.19
----------------------------------------------------------------------------
  General & Administration                                             $0.57
----------------------------------------------------------------------------
  Mine Closure Costs                                                   $0.02
----------------------------------------------------------------------------
Total Site Operating Costs ($/tonne mineralized                             
material mined and fed to the concentrator)                            $9.77
----------------------------------------------------------------------------
Other Key Costs                                                             
----------------------------------------------------------------------------
  Copper Concentrate Treatment Charges                $70/dmt Cu concentrate
----------------------------------------------------------------------------
  Copper Refining Charges                                        $0.07/lb Cu
----------------------------------------------------------------------------
  Ocean Freight, Port handling & Other Costs       $79.67/wmt Cu concentrate
----------------------------------------------------------------------------


    Infrastructure

    While the Project is located in a remote area of Argentina, it benefits
from substantial regional infrastructure. The Project is located within
ten kilometers of the railway line that connects Salta with the port city
of Antofagasta in Chile. This rail infrastructure will be used to
transport concentrates and select consumables to and from the port of
Mejillones, 60 kilometers to the north of Antofagasta and other
consumables from within Argentina. The Mejillones port has completed the
design for, and plans to develop, the required infrastructure to handle
the transfer of copper concentrates from rail cars to ships. 

    The cost to construct a 144 kilometer long high tension power line has
been included in the initial capital cost estimate. This power line will
connect the Project to a 1,000 Megawatt ("MW") capacity line that was
previously used to export power from the TermoAndes S.A. power plant
located near the city of Salta into northern Chile. TermoAndes S.A. is an
Argentine subsidiary of AES Corporation, a global utility company. The
Salta power plant is comprised of two 365 MW gas fired generating units
that use gas sourced from the gas fields located in northern Salta
Province. The plant currently has approximately 200 MW of excess
generating capacity that is considered to be sufficient for the Project's
power requirements as defined in the PEA.

    Ausenco completed a water supply and water balance analysis for the
Project. This analysis, supported by metallurgical test work using water
with varying salinity levels, derived a processing make-up water flow
sheet comprising a combination of high salinity water from the
neighbouring salar, fresh water derived from wells and desalinated
brackish well water. Conceptual design, capital and operating costs for
the construction and operation of a water treatment plant were completed
by Schlumberger and have been included in the PEA. Based on current
studies, the processing water flow sheet shows that there are adequate
sources of water available for the Project. Additional prospective areas
have recently been identified near the Project that may be sources of
additional fresh water which could further optimize the process water
flow sheet.

    Environmental

    The Project has been designed to meet World Bank Guidelines for social
and environmental management practices. Baseline studies completed to
date have included surface and ground water quality, acid rock drainage,
meteorological, and social. Provisions have been made within the mine
plan and operating costs to account for the environmental protection and
rehabilitation of the site once mining has been completed to meet the
World Bank Guidelines. 

    Next Steps

    On June 15, 2012, Lumina announced that it had entered into a strategic
review process to enhance shareholder value. The completion of the PEA is
an important step in the progress of the strategic review process.
Additional site visits to the Project are planned for the 2nd quarter of
2013 to allow interested parties to complete their technical review of
the Project. 

    Conference Call

    Call-in details for the conference call to be held on April 9, 2013 at
11:00am (Pacific Time) are:

    North American toll-free: 1-800-769-8320 

    International: 1-416-695-6616

    A replay of this conference call will be available from Tuesday, April 9
until Tuesday, April 23 and will be posted on Lumina's website at
www.luminacopper.com. The replay numbers are:

    North American toll-free: 1-800-408-3053 

    International: 1-905-694-9451 

    Pin: 9494892

    LUMINA COPPER CORP 

    David Strang, President & CEO

    CAUTION REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS: Information
and statements contained in this news release that are not historical
facts are "forward-looking information" or "forward-looking statements"
within the meaning of Canadian securities legislation and the U.S.
Private Securities Litigation Reform Act of 1995 (hereinafter
collectively referred to as "forward-looking statements") that involve
risks and uncertainties. This news release contain forward-looking
statements, such as estimates and statements that describe Lumina's
future plans, objectives, or goals, including words to the effect that
the Lumina or management expects a stated condition or result to occur.
Examples of forward-looking statements in this news release include
information and statements with respect to: Lumina's plans and
expectations for the Project; the results of the PEA, including, base
case parameters, assumptions and analysis; forecasts of net present
value, internal rate of return, initial and sustaining capital costs,
operating costs and cash flows and sensitivity analysis, taxes, and
royalties; plans related to mine and concentrator development and design,
operations, equipment and infrastructure, including proposed throughput,
production schedule and life-of-mine estimates for the Project; capital
intensity on initial capital estimate and underlying capital cost and
production forecasts; plans related to mineral processing and recovery
methods; forecast metal recoveries; copper, gold and molybdenum price
projections; mineral resource and cutoff grade estimates and underlying
assumptions; estimates of power, transportation, water and labour
requirements and costs; LOM stripping ratios; preproduction stripping
requirements; potential to optimize the process water flow sheet; plans
to meet World Bank Guidelines regarding social and environmental
management practices; plans to address environmental protection and
rehabilitation; and plans related to Lumina's strategic review process. 

    In certain cases, forward-looking statements can be identified by the use
of words such as "plans", "estimates", "expects" or "does not expect",
"is expected", "goal", "scheduled", "forecasts", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such words and
phrases or state that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved". These
forward-looking statements are based, in part, on assumptions and factors
that may change, thus causing actual results or achievements to differ
materially from those expressed or implied by the forward-looking
statements. Such factors and assumptions include, but are not limited to:
assumptions concerning copper, gold and molybdenum prices; cutoff grades;
power, transportation, water and labour requirements; processing recovery
rates; mine plan and production scheduling; process and infrastructure
design and implementation; accuracy of the estimation of operating and
capital costs, applicable tax and royalty rates; accuracy of capital cost
and production forecast used to estimate capital intensity on initial
capital; open-pit design, accuracy of mineral resource estimates and
resource modeling; reliability of sampling and assay data;
representativeness of mineralization; accuracy of metallurgical test work
and timely receipt of regulatory approvals.

    Forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of Lumina to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Such risks and other factors include, among
others: risks related to fluctuation in the price of copper, gold and
molybdenum; risks relating to estimates of mineral resources, production,
operating costs, capital and sustaining costs, decommissioning or
reclamation expenses proving to be inaccurate, the inherent operational
risks associate with mining and mineral exploration activities, many of
which are beyond Lumina's control; expropriation risks; risks related to
fluctuation in foreign currency exchange rates, interest rates and tax
rates; requirements for additional capital; capital and operating cost
escalation; restrictions on the import of mining plant, equipment,
supplies and reagents; inflation; government regulation of mining
operations; environmental, safety and regulatory risks; unanticipated
reclamation expenses; title disputes or claims; limitations on insurance
coverage; changes in project parameters as plans continue to be refined;
failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes and other risks of the mining industry;
competition inherent in the mining exploration industry; delays in
obtaining governmental approvals or financing or in the completion of
exploration, development or construction activities, as well as those
factors discussed in the sections entitled "Risks and Uncertainties" in
Lumina's annual Management's Discussion and Analysis. Although Lumina has
attempted to identify important factors that could affect Lumina and may
cause actual actions, events or results to differ, perhaps materially,
from those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as anticipated,
estimated or intended.

    There can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking statements. The
forward-looking statements in this news release are based on beliefs,
expectations and opinions as of the effective date of this news release.
Lumina does not undertake any obligation to update any forward-looking
statements included herein, except in accordance with applicable
securities laws. 

    Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this news release.

Contacts:
Lumina Copper Corp.
David Strang
President & CEO
+ 604 646 1880
+ 604 687 7041 (FAX)
dstrang@luminacopper.com
www.luminacopper.com

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