Rex eyes Hillside expansion

THE BOURSE WHISPERER: Rex Minerals will focus the pre‐feasibility study for its 100 per cent-owned Hillside copper project on expanding and optimising the mine plan to produce the equivalent of 100,000 tonnes of copper per annum.

This is almost double the production rate the company originally outlined in stage one of a recent concept study.

The change is focus stems from recent exploration success at Hillside, which has swayed the company to consider project returns would be enhanced by moving straight to a 100ktpa copper equivalent production rate rather than the previously announced two‐stage development outlined in the concept study.

Rex is also leaving its options pen in regard to potential further expansion, which is dependent on the results of exploration work to be carried out over the next six months on its regional large‐scale targets close to Hillside.

Rex has also commenced preliminary financing discussions in a bid to ensure an alignment of sponsor, developer, and financier interests when the pre‐feasibility study moves to a bankable study next year.

“The move from a staged development to an immediate 15 million tonnes per annum operation is an improvement to the project,” Rex Minerals managing director Steven Olsen said in the company’s announcement to the Australian Securities Exchange.

“With the positive drilling results of recent months it makes sense to focus on a larger immediate scale.

“Of particular importance to us is that the initial test work indicates that Hillside will produce high quality copper-gold and iron‐ore concentrates.

“This should give Rex a number of strong financing options that do not rely on equity markets.

“The key to project development is to involve potential financiers early to ensure they have followed the project from the PFS to BFS, which is what we will now do.”

Rex’s concept study was based on resource scoping and work it had received up until April 2011 and provided broad capital and operating costs estimates based on a two‐stage development.

Stage One is scheduled at 7.5Mtpa to 9Mtpa, with Stage Two ramping up to 15Mtpa to 18Mtpa.

Since April, and in particular the last three months, the company has received a number of high-grade and shallow copper results, which it said has given it confidence to now focus its pre‐feasibility study on a 15Mtpa processing plant from the commencement of operations.

This change delivers the company the opportunity to increase production and subsequent revenues in the first six years compared to the two staged approach of the concept study.

At 15Mtpa Hillside would produce over 100,000 tonnes copper equivalent (copper of 70,000t, gold of 50,000 ounces and iron ore of 1.3Mt) for a minimum of 10 years.