The project is 55% owned by KGHM Polska Miedz through subsidiary KGHM International, 31.5% by Sumitomo Metal Mining and 13.5% Sumitomo Corporation.
According to the analysts, KGHM management has said there may be capex cuts if copper prices dip below $5,000 per tonne and silver below $15 per oz.
“It also flagged the risk of impairments if prices stay low for longer [and] the biggest risk would be for KGHM International assets in our view,” the analysts said in a note.
“Management mentioned that the Sierra Gorda project would use accelerated depreciation, which would be some $400 million per year, visibly higher than what we have been estimating so far – about $230 million during the phase 1 of the project.”
The company has said Sierra Gorda’s molybdenum C1 cash cost would be $1.20 per lb assuming prices...