South32 (ASX:S32) said the Sierra Gorda joint venture (JV) has approved execution of a fourth grinding line project, following a feasibility study that confirmed strong return potential from the brownfield plant expansion, according to a Wednesday filing with the Australian bourse.
The project will increase processing capacity to around 60 million tonnes per year from 48 million tonnes per year by expanding crushing, grinding, flotation, and related supporting infrastructure, per the filing.
Initial production is targeted for mid-fiscal 2030, with full ramp-up anticipated in fiscal 2031.
The annual average payable production is forecast to rise to about 195,000 tonnes of copper; 6,000 tonnes of molybdenum; 58,000 ounces of gold; and 1.7 million ounces of silver, representing a roughly 30% increase in copper-equivalent output and an estimated 10% reduction in unit costs, the filing said.
The expansion requires around $725 million in growth capital, is expected to deliver an internal rate of return of about 20% to 23%, depending on copper prices, and will be funded through operating cash flow and joint venture debt facilities, the filing added.