THE DRILL SERGEANT: MOD Resources (ASX: MOD) announced the results of a recently-completed Feasibility Study (FS) carried out at the company’s 100 per cent-owned T3 copper project in Botswana.
MOD Resources’ T3 project is a new sediment hosted copper and silver deposit located in the underexplored Kalahari Copper Belt of Botswana.
The project features a proposed 11.5-year open pit mine, a 3 million tonnes per annum conventional processing plant and all associated infrastructure
The T3 FS was modelled on the recently-announced 34.4 million tonnes at 1 per cent copper and 13.2 grams per tonne silver for 342,700 tonnes (approx. 756mlb) of copper and 14.6 million ounces of silver T3 Ore Reserve.
MOD has progressed T3 to completion of the Feasibility Study from the discovery drill hole, drilled in 2016.
The company claimed 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 per cent across the 11.5-year mine life using a long-term consensus copper price of $3.08 per pound.
The FS determined the T3 copper project is underpinned by strong fundamentals including an LOM average copper grade of one per cent, 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 per cent.
Key Outcomes of the T3 Copper Project Feasibility Study
The project boasts strong economics with estimated LOM revenue of US$2.3 billion and EBITDA of US$1.1 billion, an NPV (pre-tax) of US$368 million and an IRR of 33 per cent.
It will sustain a long-term US$3.08 per pound copper price rate, producing pre-tax free cashflows of US$777 million, inclusive of development capital.
Payback is estimated at 3.7 years from production start with LOM All-In Sustaining costs (AISC) of US$1.56 per pound copper after deducting silver credits.
Expected development capital of US$182 million includes mine development, process plant and infrastructure.
The 342.7kt copper and 14.6 million ounce silver Ore Reserve supports an 11.5-year mine life targeting first production Q1 2021.
An average open pit mine grade of one per cent copper and 13.2g/t silver underpins LOM average annual production of around 28,000 tonnes (61mlb) copper and 1.1 million ounces silver, averaging over 30,000 tonnes (66mlb) copper in the first seven years of full production.
The high-grade concentrate that is expected to be produced at an average LOM concentrate grade of 30.4 per cent copper and 383g/t silver has already attracted strong interest from metal traders and smelters.
MOD has received written, formal Expressions of Interest from many global, top-tier debt institutions, several of which have commenced preliminary due diligence and completed site visits.
MOD is currently advancing discussions with several potential strategic parties for non-debt funding.
“The strong economics clearly demonstrate the value of this high-quality asset located within the excellent mining and investment jurisdiction of Botswana,” MOD Resources managing director Julian Hanna said in the company’s announcement to the Australian Securities Exchange.
“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.”