Name and Location
Mount Morgan copper/gold project, Queensland, Australia.

Client
Carbine Resources.

Project Description
A prefeasibility study (PFS) completed on Mount Morgan has forecast potentially robust economics for the operations, and further improves on the results achieved in the scoping study completed November 2014.

The PFS defines a one-million-tonne-a-year operation over a minimum eight-year mine life that includes only the processing of known Joint Ore Reserves Committee (Jorc) resources at the site and not any of the current exploration targets.

The proposed operation will produce three separate salable products – gold, copper and pyrite. Average production is estimated at 31 200 oz/y gold doré bullion, 3 200 t/y copper sulphate and 211 000 t/y of pyrite concentrate.

The operation is expected to produce an average of 46 500 oz/y gold equivalent, including more than 58 000 oz/y of gold equivalent during the first three years of operations. This high production during the initial years of operation ensures a relatively quick payback of capital costs and minimises financial risk. Significant upside to mine life and production rates exists on conversion of some of or all the exploration targets to Jorc resources.

Net Present Value/Internal Rate of Return
Not stated.

Value
Capital expenditure (capex) has been estimated at A$63.3-million.

Capex is based on construction using all new equipment, including allowances for all engineering, procurement and construction management costs, and excluding commissioning labour costs and contingencies.

Future feasibility studies will also assess options to reduce capital costs through further processing optimisation, leasing mobile and plant equipment, buying near-new second-hand infrastructure and rationalising other major infrastructure.

Upside exists to reduce capital costs through the full or partial use of the Kundana carbon-in-pulp plant.

Duration
Not stated.

Latest Developments
Carbine has secured an A$8-million-a-year copper sulphate offtake contract for its Mount Morgan copper and gold project.
The company has executed a binding principal offtake agreement with chemical and mineral distributor Swancorp, following extensive due diligence, off-site trial production, end-user testing and pricing negotiations.

Under the terms of the agreement, the two parties have agreed to a three-year exclusivity of mine-gate sales of up to 1 200 t/y of Mount Morgan copper sulphate, providing Carbine with a mechanism for near-term sales of production from water treatment operations.

The contract allows for the potential extension of sales of up to 5 000 t/y by mutual agreement, while pricing is done at a fixed formula, relative to the LME copper cathode price.

Carbine has said that revenue from the offtake agreement could reach a projected A$8-million a year, which is expected to reduce the C1 cash costs for the operation by 27%, from $680/oz to $494/oz. Combining the expected earnings generated from copper sulphate and the pyrite offtake, the C1 cash costs for the operation will be reduced by 89%, to $75/oz.

The projected AISC will remain at $234/oz. 

Key Contracts and Suppliers
GR Engineering Services (PFS).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Carbine Resources, tel +61 8 6142 0986, fax +61 8 9388 8824 or email admin@carbineresources.com.au.
GR Engineering Services, tel +61 7 3838 8000, fax +61 7 3838 8001 or email gres@gres.com.au.