Capex means Capstone still needs backer for Santo Domingo

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The company currently owns 70% of the venture but is prepared to become a minority shareholder, in order to advance the mine into construction, CEO Darren Pylot said on a conference call.

"It's a great project and we think getting it built in the context of a looming copper deficit is a very good value proposition for our shareholders," the executive said.

PolarX builds bigger, richer Zackly picture

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Meanwhile, Korea Resources Corporation (KORES) is expected to sell its 30% stake in the project after the South Korean government announced earlier this year plans to shut the state-owned investment firm.

Under a recently-completed technical study Capstone now believes the project could be brought into production for US$1.5 billion and would produce 134 million pounds of copper, 4.2 million tons of iron ore and 17,000 ounces of gold annually over an 18-year mine life, including 259Mlb of copper annually during the first five years of production.

Thanks to the by-products, C1 cash costs would average just 2c a pound.

Expected capital expenditure has been reduced from a previous estimate by switching from seawater to desalinated water which would now be acquired from one of a number of potential suppliers.

Pylot said Capstone could bring its share in the project down to below 50% and would also consider selling streams for the mine's by-products to help finance its share of the development costs.

"We will therefore take a pragmatic approach and balance our desire to own as much of Santo Domingo as we can with our responsibility to support and grow our existing operations," he said.

As well as iron ore, gold and silver, a stream could also include the mine's cobalt output. Capstone has begun preliminary metallurgical testwork which reportedly suggests that following the recent price rally the metal could be economically extracted.

Capstone and Kores acquired Santo Domingo in 2011 when they took over Far West Mining with the aim of bringing it into production within four years. However, work was suspended in 2015 after copper prices plummeted.

The project already has an environment permit in place and Captone expects to obtain two pending permits over the next 12 months allowing construction to begin by 2020.

In addition to the cobalt by-product, Capstone is also working on other potential improvements to the project's economics, including the use of automation, increasing gold recovery (by using desalinated water rather than seawater) and by sharing infrastructure, including a port facility and water pipelines, with third parties.