Rex Minerals review ups ante for Hillside

THE BOURSE WHISPERER: Rex Minerals (ASX: RXM) has completed a review of the company’s 100 per cent-owned Hillside copper project in South Australia as it moves closer to commencing a Bankable Feasibility Study later in the year.

Rex said the recent work has focussed on optimising the production profile and start-up capital costs identified in a Pre-Feasibility Study conducted on the project last year.

“The recent work has created substantial value to the Hillside project economics,” Rex Minerals managing director Mark Parry said in the company’s announcement to the Australian Securities Exchange.

“The Hillside PFS created a solid base for the team at Rex to work from, and now we are starting to see important improvements to the mine plan as we progress the BFS.”

 

Hillside project location. Source: Company announcement

 

Rex indicated the work it had completed as part of the mining schedule focussed on accessing some of the larger and higher grade sections at an earlier stage within the mine plan.

The company considered a combination of a new interim open pit design and multiple ore stockpiles, which it said will allow for higher grade material to be delivered to its processing plant over a considerable period compared to the model used in the PFS.

Based on the results of this work, Rex determined the average grade delivered to the processing plant from years 3 to 10 to be approximately 0.6 per cent plus gold and iron by-product credits, (0.87 per cent copper equivalent) after allowing for mine dilution.

Over this time the average annual copper production is anticipated to be approximately 80,000 tonnes, with recovered gold of over 60,000 ounces and over 1.2 million tonnes of iron ore concentrate.

This equates to an average copper equivalent production of over 115,000 tonnes for this period.

Rex also completed additional metallurgical test work with average copper recoveries improving to 88 per cent (up from 85 per cent in the PFS) while improving gold recoveries to 84 per cent (up from 82 per cent).

“The extra revenue from higher grades and recoveries has substantially enhanced our ability to lock in funding for Hillside, allowing us to progress meaningful discussions with a number of parties actively engaged in funding proposals for the project,” Parry said.

“There are few projects, across the globe that can establish a large scale and long life open pit copper operation like Hillside for less than $1 billion.”

Most of the work associated with the BFS is now nearing completion and as a result, Rex said it will be reducing its expenditure during the June 2013 quarter.

This will include the reduction of drilling capacity from four to two drill rigs.

Rex said this will reduce its level of expenditure, which the company aims to maintain until it reaches the next phase of anticipated growth leading into the construction of the Hillside project.

Based on achieving a complete finance package and all of the required approvals in 2013, Rex said it remains on track to commence Hillside’s construction in 2014 with production start-up in 2015.