El Pilar Feasibility Study: $54M NPV, 9.88% IRR
Southern Copper Corporation's El Pilar in Sonora, Mexico has a Feasibility Study outlining an after-tax NPV of $54M, an after-tax IRR of 9.88%, and initial capital of $365M. The mine plan runs 16 years at about 59 Mlbs Cu cathode/yr per year.
Southern Copper Corporation's El Pilar has reported Feasibility Study results for the copper project in Sonora, Mexico. The study headlines an after-tax net present value of $54M at a 8% discount rate. It reflects Southern Copper Corporation's (SCCO) latest disclosed economics for the asset.
Economics. The after-tax NPV is $54M using a 8% discount rate. After-tax IRR is 9.88%. Initial capital expenditure is estimated at $365M, with life-of-mine sustaining capital of $375M. The study models a payback period of 7 years. All-in sustaining costs are pegged at 1.84 USD/lb Cu. Economics are based on Copper price of $3.30 per pound (base case).
Production and mine plan. The project envisions an open-pit operation. Life of mine is 16 years. Average annual production is approximately 59 Mlbs Cu cathode/yr. Average head grade is 0.25% total copper.
These figures are extracted from Southern Copper Corporation's technical disclosures and reflect the most recent Feasibility Study on file. Compare this project against other developers and producers in our project economics database, and always verify the numbers against the original technical report before making any investment decision.
Reserves & Resources
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Proven & Probable | 317 Mt | 0.25% total copper | 1.74 billion pounds of contained copper |
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Measured | 2.2 Mt | 0.20% Total Cu, 0.10% Soluble Cu | — |
| Indicated | 81.3 Mt | 0.18% Total Cu, 0.08% Soluble Cu | — |
| Measured & Indicated | 83.4 Mt | 0.18% Total Cu, 0.08% Soluble Cu | — |
| Inferred | 88.6 Mt | 0.12% Total Cu, 0.06% Soluble Cu | — |
Our Analysis
- IRR after-tax
- 9.9%
higher than 0% of 26 projects we track
- NPV after-tax
- $54M
higher than 0% of 35 projects we track
- Initial capex
- $365M
673% of NPV
costlier than 31% of 39 projects we track
- Payback
- 7yrs
slower than 96% of 26 projects we track
- Mine life
- 16yrs
- Discount rate
- 8%
- Study price assumption
- Copper price of $3.30 per pound (base case)
- Spot copper today
- $6.47/lb
The viability question is answered plainly by the numbers: a 9.9% after-tax IRR does not clear the practical financing hurdle for a $365M build. Developers typically need roughly 15% to attract project finance, and this study lands well short of that bar. The after-tax NPV of $54M, a 7-year payback, and a bottom-quartile rank against the 26 copper projects we track all reinforce the same conclusion: as designed, this project is unlikely to secure the capital required to break ground. The 16-year mine life at least gives the asset durability, but durability alone does not fund construction.
What would change the math? The study's base case assumes copper at $3.30 per pound, while today's spot sits at $6.47. That gap is the single most important variable in the project's favor. A feasibility study carries a plus or minus 15% band, so the cost side is reasonably well understood; the revenue side, however, is being tested at less than half of current market prices. If copper prices hold anywhere near current levels, the IRR would move materially higher, and the financing hurdle becomes far more surmountable. The alternative levers, lower capex or a partner to share the $365M burden, are less obvious from the study's figures.
The funding picture is unusual. The $365M capex is 673% of NPV, a capital-intensive profile, yet it is small relative to the company's US$143.25B market cap. This is a diversified large-cap with 21 tracked projects, not a junior straining to finance a single asset. The constraint is not corporate balance sheet capacity; it is whether this particular project justifies capital allocation against a portfolio of alternatives. The market's skepticism, reflected in an NPV well below the company's market cap, likely stems from the weak base-case returns, not from financing mechanics. The decisive question: does the company re-run the economics at prices closer to today's $6.47 copper, or does this project sit on the shelf until the price deck justifies it?
Our take, benchmarked against the project economics in the Mining Stocks database. Figures are estimates drawn from company technical reports — not investment advice; always verify against the source filing.