JOHANNESBURG (miningweekly.com) - Base metals-miner Xstrata Copper would invest $542-million, or A$589-million, to extend the life-of-mine of its Ernest Henry Mining (EHM) operations, in Queensland, to at least 2024, as part of its plans to grow its total copper output to 1,5-million tons a year by the end of 2014.

The producer noted in a statement on Thursday that the investment would be used to transform the open-pit mining operations into a major underground mine, while it would also construct an associated magnetite extraction plant.

The EHM operation was due to be closed in 2012.

"This is the second of five brownfield projects that Xstrata Copper is planning to move into the construction phase over the next nine months across our global operations, following the approval of the Lomas Bayas extension project in October," Xstrata Copper CE Charlie Sartain noted.

The project would enable EHM to achieve output levels of about 50 000 t/y of copper and 70 000 oz/y of gold in concentrate from 2012 onwards, when processing from open-pit mining would stop.

Construction of the underground mine would start in the first half of 2010, with first production expected by late 2011. It would reach full output by early 2013.

The construction of the magnetite plant would also start in the first half of 2010 and would be commissioned early in 2011.

The investment decision comes after feasibility studies into the proposed project had resulted in a revised ore reserves estimate of 72-million tons at a grade of 1% copper, 0,5 g/t of gold and 22% magnetite, Xstrata Copper stated.

It added that the total tonnage represented a 600% increase over previously published underground reserves.

Ore would be mined mainly from a major hoisting shaft to be sunk to a depth of 1 000 m, producing six-million tons a year of ore at full capacity.

The existing concentrator at EHM would be reconfigured to align with the underground production rate, while a separate extraction circuit would be installed to produce magnetite concentrates, the copper-miner pointed out.

The magnetite processing operation would produce about 1,2-million tons a year of magnetite, which would be exported to Asia.

The project was seen as an important step in sustaining Xstrata Copper's north Queensland copper operations, which Sartain noted made a significant contribution to the Queensland economy.

It would continue to sustain the future of EHM, while also continuing to supply copper concentrates to Xstrata Copper's smelter at Mount Isa, which supported the Townsville refining operations.

It would also create 400 permanent jobs from 2013 onwards.

On October 15, Xstrata announced that it would invest $293-million to extend the life of the Lomas Bayas mine in Chile by eight years to 2020 to sustain production capacity at 75 000 t/y of copper cathode.