Ivanhoe Electric's Santa Cruz copper project in Arizona has become significantly more expensive to develop, according to a new prefeasibility study released on September 23, 2026. Pre-production capital costs have risen to $1.43 billion from $1.24 billion reported a year ago, representing a 15% increase, as reported by Mining.com. Despite the higher capital requirements, the project's economics have improved modestly.
The net present value (NPV) climbed to $1.5 billion from $1.4 billion, even though the study incorporated a higher copper price assumption. However, the project's internal rate of return (IRR) slipped to 19% from 20%, while the payback period extended to 4.8 years from the previously projected 4.4 years. The 2026 prefeasibility study incorporates an 8% discount rate and assumes a copper price of $4.75 per pound, which represents an increase from the $4.25 per pound base-case assumption used in last year's analysis.
According to the company, the higher capital spending reflects multiple factors including a redesigned access tunnel intended to lower groundwater risk, as well as inflationary pressures on construction materials and labour costs. Located in Casa Grande, approximately 77 kilometers south of Phoenix, Santa Cruz represents Ivanhoe Electric's most advanced project. The company, led by billionaire founder and executive chairman Robert Friedland, has postponed first cathode production to 2029, a year later than originally planned.
The company has redesigned Santa Cruz's mine plan, replacing a roadheader-based underground access system with a Robbins Crossover tunnel-boring machine. This revised approach has increased average copper production to approximately 74,700 tonnes annually over the first 15 years, compared to approximately 72,000 tonnes previously. The updated plan supports a mine life of 24 years, one year longer than calculated in the 2025 study.
According to the resource estimate prepared this month, Santa Cruz holds 140.1 million probable tonnes grading 1.08% copper for contained metal of 1.52 million tonnes. Life-of-mine cash costs are projected at $1.47 per pound, with all-in sustaining costs estimated at $2.28 per pound. Resources outside the current reserves include 1.44 million indicated tonnes and 3.33 million inferred tonnes of contained copper across the Santa Cruz, East Ridge and Texaco deposits.
The property benefits from access to rail, highways, power and natural gas infrastructure on approximately 24 square kilometers of private land with surface, mineral and associated water rights. Ivanhoe Electric reports that necessary permits to begin surface construction have been obtained and early development work has commenced. The company is pursuing project financing with several alternatives under discussion.
In August 2026, Ivanhoe Electric received a preliminary project letter from the U.S. Export-Import Bank for potential debt financing of up to $1.1 billion, with the application now advancing to a second phase of due diligence. According to National Bank Financial mining analyst Andrew Dusome, the prefeasibility study represents a key de-risking milestone for Santa Cruz, with updated engineering, design, development and pricing supporting continued advancement toward first production in 2029.
As one of the most advanced U.S. copper projects with fully domestic cathode production capability, the project is expected to benefit from ongoing U.S. government support for developing domestic critical minerals mining operations.
Source: mining.com