JOHANNESBURG (miningweekly.com) – Northern Cape mining company Copper 360, which listed on the Alternative Exchange of the Johannesburg Stock Exchange this year, took yet another leap forward on Wednesday with the announcement that it had acquired a brand new production-doubling copper processing plant next to its own central processing facility, which is about to be commissioned.

“The acquisition of Nama Copper is a paradigm shifter,” was Copper 360 CEO Jan Nelson’s comment to Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

This is because Copper 360, which is focused on the processing of historical mined copper rock dumps, through a procedure of environmental clean-up, and the mining of surface and shallow copper resources, gets a brand new processing plant right next door to its own plant.

Located adjacent to Copper 360’s operations in Nababeep, Nama Copper has historically processed copper slag through a sulphide flotation plant that is almost an exact replica of the modular flotation plant that Copper 360 is currently constructing.

"By buying an operating plant, there are no longer construction and commissioning issues. The plant's already there, it runs, it immediately adds to the revenue, and it will ensure that we can pay our shareholders a bigger dividend," said Nelson.

The plant being acquired has a capacity to treat 20 000 t of copper sulphide ore a month at recoveries of between 88% and 92%. While it has been treating slag, it can treat sulphide concentrate.

“It's got a brand new mill. We know the plant quite well and its virtually the same as the one we’re building. The thing that stands out is that we get a plant that is ready to produce from tomorrow,” Nelson enthused.

In having the capacity to double production, it is poised to double revenue as well. “The revenue we were planning to make in 2026 financial year, we’re now going to make next year because of this plant,” Nelson added. The revenue of R2.2-billion planned for financial year 2026 will now be able to be delivered in financial year 2025.

Nama Copper’s slag operations have become uneconomical and it has not been able to replace the slag with economically viable sulphide ore resources.

Coming with the deal is a large land area, as well as almost 22-million tons of tailings with a copper content of between 0.3% and 0.6% copper. This resource, which represents between R12-billion to R24-billion in copper metal in the ground at a copper price of $8 500/t and an exchange rate of R19 to the dollar, could result in a significant increase of Copper 360's measured and indicated resource category upon further confirmatory drilling.

Copper 360 and Mazule Resources, the shareholder of Nama Copper, have entered into an agreement to acquire all the shares and claims in Nama Copper for R200-million.

An impressive part of the transaction is that Copper 360 has signed an offtake agreement with an associate company of the seller, which is an offtaker of copper.

“We've signed an offtake agreement with them on very favourable economic terms,” Nelson disclosed. While the detailed terms of the offtake agreement are confidential, Copper 360 will receive payment of 80% of the prevailing London Metal Exchange copper price on delivery on an ex-works basis.

The offtake will be from the plant being acquired. In addition, Copper 360 is receiving the benefit of a R50-million working capital facility.

Also coming to Copper 360 as part of the transaction are an additional 2.5 MW diesel generator, an operational fleet, a mining licence, a water use licence application ready for submission, and increased tailings disposal optionality.

Mining Weekly: How do you intend to fund this acquisition?

Nelson: We’re finalising two major debt agreements that we’ll guide the market on in due course. There won't be any dilution to shareholders in terms of funding this acquisition. It will be debt. We have no debt on the balance sheet and we're just finalising those agreements as we speak. They will provide the necessary capital to fund this acquisition. But what shareholders must also remember is that when the two plants are in full operational mode in February, the company will be generating between R70-million and R90-million of revenue a month, so there's also significant cash flow that will come to the party, but the debt arrangements we put in place will ensure we can fund this.

Why do you see the acquisition of Nama Copper as a paradigm shifter for Copper 360?

The reason we see it as a paradigm shifter is because the Nama Copper property is contiguous and adjacent to our central processing facility at Nababeep. With this acquisition, we immediately get an operating plant that can produce the same amount of copper that our current plant, on which we are finishing construction, can. It immediately allows us to double our production from 4 000 t of copper planned for next year to 8 000 t of copper. We would have built another plant next year, but now, with this acquisition, we don't have that requirement. In addition to that, we get certain water rights, we get a large land area, and the other significant thing is we get tailings dumps, where there are almost 22-million tons of tailings with a copper content of between 0.3% and 0.6%.

What are the key points of the offtake agreement?

A fantastic part of the transaction is that one of the sister companies of the seller is an offtaker of copper and we've signed an offtake agreement with them on very favourable economic terms, where they will then take the offtake material from this plant that we are buying from them. In addition to that, they're also providing us with a R50-million working capital facility, so that's an absolute fantastic advantage for our company.

When do you expect due diligence to be completed?

Completion is expected within the next three to four months. We've got some due diligence around the tailings dams. The plant doesn't need any due diligence because we know it well. And then there is just financial information around the company and certain regulatory processes that we understand, so really stock standard stuff that we have to do. We don't envisage that it will take long and we don't see any showstoppers there.

What are the calculations behind the acquisition ensuring that the R2.2-billion revenue planned for financial year (FY) 2026 will now be able to be delivered in FY 2025?

It's very easy. The plant is operational and within the next week, once we've paid the R50-million deposit, we’ll lease the plant until the Section 11 comes through. That means we can immediately feed ore through that plant and it's got virtually the same capacity as the one we’re building, which will have done plus-minus 4 000 t for next year. The Nama Copper plant adds another 4 000 t. That doubles our revenue immediately. It's like those quick soup adverts. You just add water and you've got instant soup, and it's the same with the Nama Copper plant because it's operational, we've got the ore, we don't have to build another plant, and it immediately doubles our production. I think that's a very good thing for us and our shareholders because the risk of building a plant has heightened. There are a lot of global supply issues now. You see the ports backed up.

Copper 360 itself still has a long way to go. You talk about Rietberg, but you've got a dozen Rietberg-type mining possibilities on the horizon and you've got 60 exploration opportunities.

We’re quite fortunate that we've got all this work but we’re focused on Rietberg and the work on Rietberg has been completed. That mine will start up early next year to provide ore to the plants. We've now started work on Homeep East, which our geologists find is similar to Rietberg. The work on that will be finished in the next quarter and our plan is to bring that mine online by the end of next year. In addition, we're currently drilling two openpit deposits that we will also bring online towards the middle of the year. All this gives us quite a lot of flexibility in terms of ore that has to be provided to the plants, and one of the key things to have in mining is flexibility. We're hoping that by the end of the year, Rietberg will be up and running, Homeep East will be up and running, and we'll be up and running into two openpits, which will give us quite a lot of flexibility. In addition, we've just done a R40-million rand upgrade to our solvent extraction and electrowinning (SX/EW) plant, which makes our copper plates. That will also double its production and the results we've seen from that are quite encouraging. We need to up the ore that has to go into this oxide plant but our geologists have enough ore and orebodies in place to do that. We're very excited by all the activity that will start happening next year.

You've got those copper plates already being sold into the market, and you are doing an environmental job by removing what were waste dumps and turning the copper coming out of those into copper plate. How long will that go on for?

The lifetime of the copper oxides is in excess of 20 years – and that's just the loose material that's lying around. The SHiP reverse takeover brought with it a number of hard rock deposits, such as the openpits now being drilled. These have an oxide cap, which will further add to the life-of-mine of the oxides, ahead of the transitioning into sulphides. The oxides will go through the SX/EW and the sulphides through the concentrate plants, but that also then provides further life to the whole business.

What, in your view, should be the main takeaway from this interview?

The fact that shareholders can see that the operational growth that would have taken place by us building another plant next year is now gone. That risk is gone. Management can focus on pushing these two plants to the maximum and can look forward to a bigger dividend and better cashflow. The cashflow that the company is generating is now derisked.

NAMA COPPER'S SLAG OPERATIONS

The beneficial owners of copper producer Nama Copper are Mazule Resources and with Nama Copper’s slag operations becoming uneconomical, the company has not been able to replace the slag with economically viable sulphide ore resources.

Specifically excluded from the transaction is the metal reclamation plant that Nama Copper also operates on its Nababeep premises. 

Part of the transaction involves Mazule being entitled to operate from the Nama Copper premises for a period of two years from the date of the first tranche payment on a no-charge lease.

Conveniently, Nababeep, a town in Namakwa district municipality, is the locality for all of Copper 360’s plants – and the initial Rietberg mine coming on steam is able to produce double the volume of rock that the plants need.

Interestingly, the mill installed on the SX/EW can process 40 t of rock an hour, twice the requirement of 20 t, which forms part of Copper 360’s double-redundancy approach to ensure reliability and consistency.

Copper 360 already produces one-metre by one-metre copper plate that is 6 cm thick, with each plate weighing about 38 kg and containing 99.89% copper in an area where the copper is very pure. Its all-in sustaining costs are less than $4 250/t of copper, with a healthy margin being provided by a copper price hovering close to $8 000/t.

A major energy company is looking to establish a 10 MW solar plant for Copper 360, which continues to pursue its wind farm ambitions.

The mining school that Copper 360 has established at Concordia has attracted a lot of international attention. The company has a large project team, which builds the plants it requires in-house.