Goldcorp and Teck Combine El Morro and Relincho Projects in Chile

by Keith Powell
Photo of the El Morro project in Chile, showing a blue sky, desert landscape and trucks in the foreground of the picture.

The El Morro and Relincho projects, located close to each other in the Atacama region of Chile will be combined into a single project in order to reduce costs and lower the environmental footprint. — Photo courtesy Project Corridor/Teck/Goldcorp

GOLDCORP INC. (“Goldcorp”) (TSX: G, NYSE: GG) and Teck Resources Limited (“Teck”) (TSX: TCK.A & TCK.B, NYSE: TCK) today announced an agreement to combine their respective El Morro and Relincho projects, located approximately 40 kilometres apart in the Huasco Province in the Atacama region of Chile, into a single project.

Teck and Goldcorp will contribute their respective project interests into a 50/50 joint venture. The combined project will have the interim name of Project Corridor.

“Combining these two neighbouring assets is a common sense approach that allows us to consolidate infrastructure to reduce costs, reduce the environmental footprint and provide greater returns over either standalone project,” said Don Lindsay, President and CEO of Teck. “Through Project Corridor, we will work to establish meaningful relationships with the community, Indigenous Peoples and other stakeholders that will help guide the project’s development and create greater value for all parties.”

“The combination of El Morro and Relincho is consistent with our focus on maximizing value from our asset portfolio,” said Chuck Jeannes, President and CEO of Goldcorp. “We now have an improved development approach that we expect to significantly decrease initial capital requirements and increase financial returns, while ensuring the project is developed in partnership with our neighbours, creating lasting benefits for residents in the region and our shareholders.”

Based on the results of a Preliminary Economic Assessment (“PEA”), Project Corridor contemplates a conveyor to transport ore from the El Morro site to a single line mill at the Relincho site. We expect that this approach will provide a number of key benefits, including:

  • Reduced environmental footprint: Project Corridor will reduce infrastructure requirements, including utilizing a single desalination plant, a single port, a single transmission line, a single concentrator and a common tailings facility. As a result, the environmental footprint of Project Corridor will be significantly less than the combined footprint of the standalone projects. The use of a common tailings facility located at the Relincho site responds to concerns expressed by local communities regarding the location of the previously proposed El Morro tailings facility within the agriculturally important Huasco River watershed.
  • Lower cost, improved capital efficiency: Common infrastructure will significantly reduce project capital costs and ongoing operating costs. Further, the PEA contemplates a phased development approach that will allow future expansions to be funded from project cash flows, thus significantly reducing the initial funding requirement. As a result, the initial capital cost to bring Project Corridor into production is targeted to be US$3.5 billion1, with further capital required to construct future phases being funded largely from project cash flows. The feasibility studies of the standalone El Morro project and standalone Relincho project had previously estimated development costs at US$3.9 billion2 in 2011 dollars and US$4.5 billion3 in 2013 dollars, respectively.
  • Optimized mine plan: Project Corridor is one of the largest undeveloped copper-gold-molybdenum projects in the Americas. The integrated project allows for the optimization of both resources, resulting in a longer mine life of at least 32 years, based on existing proven and probable reserves, with the scope for further extensions given the significant exploration potential across the combined property. Initial stage development contemplates a single line mill and concentrator facility with an initial capacity in the range of 90,000– 110,000 tonnes per day to produce an average of approximately 190,000 tonnes of copper and 315,000 ounces of gold per year over the first full 10 years.
  • Enhanced community benefits: Project Corridor is expected to provide significant economic benefits to the local region. An estimated 4,000 jobs will be created during the construction phase and 1,400 jobs during operation. The increased mine life will provide longer-term employment opportunities and community investment.
  • Community engagement: Project Corridor will undertake extensive engagement with communities, Indigenous Peoples and other stakeholders to help guide the project’s development. In the months ahead, project staff will be meeting with the community and Indigenous Peoples to explain the Project Corridor concept and work collaboratively to define the project’s engagement model. This process will be facilitated by two independent organizations with expertise in community engagement and experience in enhancing social performance and socially sustainable outcomes for resource projects.

In combination with community consultation, a Pre-Feasibility Study is expected to commence in early 2016 and be completed in 12 – 18 months. Assuming a positive Pre-Feasibility Study, a Feasibility Study would be initiated thereafter.

Goldcorp’s El Morro project contained proven and probable reserves of 8.9 million ounces of gold and 6.5 billion pounds of copper as at December 31, 2014. Teck’s Relincho project contained proven and probable reserves of 10.1 billion pounds of copper and 464 million pounds of molybdenum as at December 31, 2014. Based on the December 31, 2014 mineral reserve figures reported by Goldcorp in respect of El Morro and Teck in respect of Relincho, the proven and probable reserves of Project Corridor would contain approximately 16.6 billion pounds of copper, 8.9 million ounces of gold, and 464 million pounds of molybdenum. Further work on Project Corridor, including updating reserves estimates at December 31, 2015, may lead to revised mineral reserve estimates that could be higher or lower than the combined figure presented. See Appendix A “Reserve and Resource Disclosure” below for important additional information regarding the mineral reserves and resources of the projects, including commodity price assumptions.

Goldcorp also announced earlier today that it has reached an agreement to acquire New Gold’s 30% interest in the El Morro project for US$90 million in cash upon closing, along with a 4% gold stream on future gold production from the El Morro property. Closing of the transactions contemplated by this news release is subject to customary conditions and is expected to occur in the fourth quarter of 2015.

CIBC World Markets acted as financial advisor to Teck and Goldcorp.

For more information about Project Corridor, go to

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