FEASIBILITY STUDY CONFIRMS OUTSTANDING PROJECT ECONOMICS FOR T3 COPPER MINE
MOD Resources Ltd (ASX/LSE: MOD) is pleased to announce compelling results of the completed Feasibility Study (“FS”) for the T3 Copper Project (“T3” or “T3 Project”) which includes a proposed 11.5-year open pit mine, 3Mtpa conventional processing plant and all associated infrastructure.
The T3 Copper Project Feasibility Study is modelled on the T3 Ore Reserve as announced on 25 March 2019.
Key Outcomes of the T3 Copper Project Feasibility Study
Strong Project Economics
· Estimated LOM revenue of US$2.3 billion and EBITDA of US$1.1 billion
· NPV (pre-tax) of US$368 million and an IRR of 33%. Long term US3.08/lb Cu and 8% real discount rate
· Pre-tax free cashflows of US$777 million, inclusive of development capital
· Payback 3.7 years from production start
· LOM All-In Sustaining costs (AISC) of US$1.56/lb Cu after deducting silver credits
Lowest Quartile Capital Intensity
· Development capital of US$182 million includes mine development, process plant and infrastructure
Robust Project Parameters
· Ore Reserve containing 342.7kt Cu and 14.6Moz Ag
· 11.5-year mine life targeting first production Q1 2021
· Average open pit mine grade of 1.0% Cu and 13.2g/t Ag
· LOM average annual production of ~28kt (61mlb) Cu and 1.1Moz Ag
· Averaging over 30kt (66mlb) Cu in the first 7 years of full production1
1 Following ramp-up and from 2022 through 2028
High Grade Concentrate Production
· Average LOM concentrate grade 30.4% Cu and 383g/t Ag, strong interest from metal traders and smelters
T3 Funding Options
· Received written, formal Expressions of Interest from many global, top-tier debt institutions, several have commenced preliminary due diligence and completed site visits
· MOD is advancing discussions with a number of potential strategic parties for non-debt funding
MOD’s Managing Director Julian Hanna, said:
“On behalf of the MOD team, I am delighted to deliver the compelling results of the T3 Copper Project Feasibility Study. The strong economics clearly demonstrate the value of this high-quality asset located within the excellent mining and investment jurisdiction of Botswana.”
“There are a number of outstanding operational and financial outcomes of the Feasibility Study, however several stand out when compared to other emerging global copper developers and producers. Firstly, the T3 Project represents a relatively straightforward open pit mine and processing plant, requiring moderate capital expenditure to bring into production. Then, due to the very favourable geometry, grade and metallurgical characteristics of the orebody, the Feasibility Study has demonstrated that even at copper prices much lower than today’s spot price, the T3 Copper Project is expected to generate excellent returns.”
“T3 also provides the possibility for future production expansion from other potential deposits in the surrounding area, where MOD has already demonstrated early drilling success. Drilling is expected to focus on this satellite potential during 2019 to take advantage of the capital invested into T3.”
Commentary
MOD’s 100% owned T3 Project is a significant new sediment hosted copper and silver deposit in the under-explored Kalahari Copper Belt in Botswana. Over the past three years the Company has progressed T3 from the discovery drill hole, announced in March 2016, to completion of a FS. The FS has demonstrated the opportunity to develop a copper mine that is expected to generate revenue of US$2.3 billion at a margin of over 47% across the 11.5-year mine life using a long-term consensus copper price of $3.08/lb.
The T3 Project is based on the T3 Resource, announced on 16 July 2018, and the T3 open pit is modelled on the T3 Ore Reserve announced 25 March 2019. The FS identified that the T3 Copper Project is underpinned by strong fundamentals including an LOM average copper grade of 1.0%, an orebody geometry that facilitates a simple, six-stage open pit design and metallurgy that requires a relatively moderate capital investment, producing high grade copper concentrates with an average copper grade of 30.4%. This premium grade concentrate contains minimal deleterious elements, presenting an opportunity to blend and improve lower quality smelter feedstock, which has generated significant interest from numerous metal traders and smelters.
The proposed six stage open pit (Figure 1) will utilise conventional equipment to support an average annual mining rate of 3.0Mtpa of ore with a LOM strip ratio of 5.7 to 1.
Pre-strip activities are expected to commence during the first half of 2020 and ore from the first stage of the open pit is targeted to be processed during the first quarter of 2021. The bulk of waste movement is expected between 2020 and 2024 resulting in a higher strip ratio during these early years. Following this, the strip ratio will reduce to an average of 2 to 1 and mining costs should follow this general downward trend (Figure 7).
The open pit is located less than 1 kilometre from the process plant. Ore will be either directly fed into the primary crusher or directed to a Run of Mine (“ROM”) stockpile, providing surge capacity and opportunity for ore blending.
The T3 orebody is comprised of metallurgically favourable chalcopyrite, bornite and chalcocite. Ore will be processed through a conventional process plant with an annual throughput of up to 3.2 million tonnes at a head grade of 1.0% copper and 13.2g/t silver. The flow sheet (Figure 10) includes a primary crusher / SAG / Ball mill comminution circuit to achieve a grind size of P80 180µm, a natural pH flotation circuit, rougher flotation with a regrind circuit to achieve a grind size of P80 90µm and a cleaner flotation circuit.
LOM metallurgical recoveries are 92.9% copper and 88.0% silver, producing a concentrate with grades that peak at 34.7% Cu and 601 g/t Ag, averaging 30.4% Cu and 383 g/t Ag.
The Project Execution Schedule defines a 19-month design, construction and commissioning timeframe targeting first concentrate production before the end of the first quarter of 2021.
Average annual production over the life of mine is expected to be ~28kt of copper and 1.1Moz of silver however for the first seven full years of production (between 2021 and 2028), plant throughput, feed grades and recoveries are expected to be higher than LOM average and support copper production averaging over 30kt.
All-In Sustaining Costs over the life of mine are highly dependent on mining costs and waste movement. Over the life of mine, average AISC are expected to be in the lowest quartile of the cost curve at a very competitive $1.56 per pound of copper produced, after silver credits.
The estimated direct capital cost for the process plant is US$49 million. Project indirect costs, including engineering, procurement and construction costs, are estimated at US$32 million. Site infrastructure costs, which include site preparation, a 14km all-weather unsealed access road to the A3 highway, the expansion to a 400-person accommodation camp in Ghanzi and administration buildings are estimated at US$23 million.
The current estimated direct and indirect capital cost for the establishment of the mine, the construction of the process plant and associated infrastructure is US$142 million (excluding mining pre-strip costs).
T3 Copper Project Funding Update
The T3 Project has generated strong interest from global, top-tier, debt providers to fund a large part of the development capital. Formal Expressions of Interest have now been received from a number of selected financial institutions who have already commenced preliminary due diligence and conducted site visits. A Request for Proposal will be sent to financial institutions following the release of the FS.
In parallel with the debt funding process, MOD is advancing discussions with potential strategic partners to assist with funding the non-debt component of the T3 Copper Project.
The strong interest and positive engagements from both debt and non-debt institutions provides the Board with confidence in the availability of funding options for the T3 Project.
Full RNS Link HERE
About MOD Resources
MOD Resources Ltd (ASX/LSE: MOD) is a dual listed copper exploration and development company with a dominant land position within the Kalahari Copper Belt in Botswana. The Company is focussed on the 100% MOD owned T3 Copper Project, expected to be a high-margin, low-cost copper mine. In parallel with the development of the T3 Copper Project, MOD continues its exploration program across several priority drill targets and within untested areas of interesting and potentially significant Cu-Zn soil anomalies.
A substantial in-fill drilling program is in progress with the objective to upgrade a portion of T3 Indicated Mineral Resources to the higher confidence Measured Resource category subsequent to this FS announcement.
The Company is continuing to advance discussions with interested parties in relation to T3 funding opportunities and is targeting to commence development of the T3 Copper Project in the second half of 2019, with a vision of first copper concentrate production in the first half of 2021. In the mid-term MOD will focus on generating value for shareholders.
MOD has a social licence to operate within Botswana as well as within the host community of Ghanzi. MOD will continue to work collaboratively with regulators and members of the Ghanzi District to ensure that any social investments and developments are targeted to create a positive and lasting legacy.
Cautionary Statement
The FS is based on Probable Ore Reserves derived from Indicated Mineral Resources only. No Inferred or Measured Mineral Resources were included in the estimation of Ore Reserves. The FS was prepared to an overall level of accuracy of ±15%. It is based on material assumptions outlined elsewhere in this announcement and in the Reserve update, announced 25 March 2019. There is no certainty that the FS or the Ore Reserve from which it was derived will result in commercial production or the assumptions used in the FS and resulting economic outcomes that are included in this announcement will be realised. Given the uncertainties involved, investors should not make any investment decisions based solely on the FS. The Company has concluded it has a reasonable basis for providing the forward-looking statements included in this announcement.
