Companies: MNA   

After previous delays, Monterrico Metals expects to seek permission to develop Peru's Rio Blanco copper deposit early next year.

Former AIM star Monterrico, which still has more than £10 million cash after losing £2.2 million in the six months to June, hopes its long-awaited bankable feasibility study on the Rio Blanco copper and molybdenum project in northern Peru will be ready in four months. The company, where former British ambassador to Peru and Falkland Islands governor Richard Ralph has replaced Robert Guy as chairman, estimates Rio Blanco could hold as much as 7.2 million tonnes of copper and 287,000 tonnes of molybdenum and says it intends to ask the Peruvian authorities in the first quarter of 2007 for a permit to mine.

Since June's general election installed a mining-friendly government in Lima, Ralph and chief operations officer Ray Angus (who knows major Chile-focused copper group Antofagasta well) say they expect a favourable decision. They say this could lead to initial production at an annual rate of 220,000 tonnes of copper and 2,500 tonnes of molybdenum as from 2010, rising to 345,000 tonnes of copper in the fourth year.

Ralph claims the project, which would involve piping concentrate to the coast, would be economical at any copper price above 52 cents, against today's price of around $3.40, with costs helped by a planned 'filtered tailings' operation. 'You can hedge at $2.70 five years ahead,' he maintains, adding that the Rio Blanco deposit is high grade and has no arsenic.

Monterrico, which is close to appointing a new chief executive officer to replace former boss Chris Eager, owns 100 per cent of Rio Blanco, which cost £600 million or more, in debt and/or equity, to bring to production. However, the company accepts that a joint venture, probably with a big group, is the most likely route to production.

Earlier delays, technical uncertainties and fears that an anti-mining party would win Peru's elections have helped take erstwhile high flier Monterrico down from nearly £6 to below £2 in two years. Growth Company Investor suggested partial profit taking a year ago at 542.5p and the shares are now 188p, up 6.5p this morning.

They could rally further if Rio Blanco gets the go-ahead.

Monterrico Metals	AIM	£8.42m	32.00p	-1.50p
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