PERTH (miningweekly.com) – A strategic review into the copper assets of ASX-listed Metals X is in its final stages, with the miner on Thursday announcing a A$32-million exploration deal with fellow-listed Independence Group, as well as a scoping study for its Nifty copper operations, in Western Australia.

Metals X in December last year suspended mining operations at Nifty as the mine continued to perform below expectations.

A scoping study was subsequently launched to investigate the development of a major expansion to the historical oxide openpit at the Nifty operation, in order to access and extract the sulphide material.

The now completed scoping study has found that some 23-million tonnes of sulphide feed could be recovered over a mine life of ten years, feeding the existing concentrator.

The sulphide operation is expected to produce between 250 000 t and 270 000 t of copper in concentrate, at an average production rate of 26 000 t/y of copper in concentrate.

The scoping study estimated an all-in sustaining cost of around A$5 400/t to A$5 800/t, while at the current spot price of A$8 000/t, the project is expected to generate a pre-tax net cash flow of between A$285-million and A$315-million, a pre-tax net present value of between A$105-million and A$125-million, and a pre-tax internal rate of return of between 32% to 36%.

The sulphide operation is estimated to require a startup capital of between A$40-million and A$60-million, which will include studies, pre-production drilling, refurbishment, pre-strip and commissioning.

“The results from the Nifty openpit scoping study are very exciting for our shareholders. The study has identified the potential for a ten-year openpit operation producing approximately 26 000 t/y of copper in concentrate, with the opportunity for additional copper cathode production from a restart of the heap leach solvent extraction/electrowinning (SX/EW) facility, a significantly better outcome than recommencing underground operations,” said Metals X CEO Mike Spreadborough.

The restart of the existing heap leach SX/EW facility could produce an additional 40 000 t to 50 000 t of copper as cathode over an eight-year period.

“Given the existing processing plant and infrastructure at Nifty, the anticipated pre-production capital does not represent a significant impost to the project. The relatively low unit costs of openpit mining, and long mine life, provide the foundation for a robust project,” said Spreadborough.

“We intend, subject to the completion of the copper asset strategic review, to immediately commence a feasibility study which will focus on further resource definition drilling, mine optimisation and design, and the openpit mining contract, which all have the potential to increase the mine life and provide sustained earnings.

“The feasibility study will also investigate recommencing heap leach processing, allowing for the mined oxide ore to add further value to the project.”

Metals X chairperson Patrick O’Connor told shareholders on Thursday that the sulphide proposal represented an entirely new approach to mining at Nifty.

“The use of the significant installed infrastructure at the Nifty copper operation, with an estimated replacement value of more than A$200-million, and the opportunity for the potential restart based on a combined openpit and heap leach operation, offers a tremendous opportunity for a low capital cost restart of economic production of copper, subject to the successful completion of the required feasibility study.

“The board looks forward to completing its strategic review and outlining the strategy of the company,” he added.

Should the feasibility study prove positive, a final investment decision on the sulphide operation is expected in the first half of 2021.

Meanwhile, the strategic review being undertaken will also culminate in a decision on the appropriate funding structure for the feasibility study and the associated holding costs of the Nifty operation and the Maroochydore copper project, with consideration to be given to a wide range of funding alternatives, to allow for focus on restoration of shareholder value.

The review will also result in the building of an experienced team with the skills to achieve the completion of the required studies, and to undertake the planning required for the execution of a final investment decision, said O’Connor.