Name of the Project
T3 openpit copper/silver project.

Location
The project is located on the Kalahari copperbelt, in northern Botswana.

Client
MOD Resources has signed a binding agreement with its joint venture (JV) partner, Metal Tiger, to acquire its 30% interest in the T3 project for A$26.6-million.

MOD has also acquired the rights to buy Metal Tiger’s 30% interest in all other JV exploration assets for up to three years from the completion of the transaction.

Under the terms of the agreement, MOD will issue 17.2-million shares to Metal Tiger, resulting in the Aim-listed investment company holding a combined 12.5% interest in MOD.

A further 40.6-million options, with a zero exercise price, will be offered, enabling Metal Tiger to convert them into ordinary shares within a three-year period, provided that the conversion will not result in Metal Tiger’s holding an interest of more than 12.5% in MOD.

The shares will have a 12-month escrow period and the options will have no voting or dividend rights until converted into shares.

The transaction has also laid the foundation for the financing and development of the T3 project, and positioned MOD as a dominant player in the Botswana copper belt.

The transaction is subject to a number of conditions, including MOD shareholder approval, regulatory approvals and the completion of the transfer of the JV exploration assets.

The exploration assets will be transferred to a new Botswana registered JV company, Tshukudu Exploration, which will be 70% held by MOD and 30% by Metal Tiger.

The company will be managed by MOD through a customary JV agreement, with both parties funding ongoing exploration.

Project Description
The T3 prefeasibility study (PFS) has confirmed the project as a robust, long-life copper mine.

The PFS comprises openpit mining and conventional flotation processing, with  the PFS base case and PFS expanded cases as production scenarios.

Mining and process engineering studies for the PFS base case have used a revised processing rate of 2.5-million tonnes a year, a 25% increase on the scoping study production target announced in December 2017.

In the PFS base case, the ore reserves are mined from a four-stage openpit with a waste:ore ratio of 4:76. Ore will be processed through a conventional semiautogenous (SAG)/ball mill and flotation circuit, powered for the first two years by a diesel generation plant before switching to grid power.

The expansion case considers mining and processing at a rate of 2.5-million tonnes a year for the first three years in accordance with the PFS base case. The process plant will be upgraded to process four-million tonnes a year during the fourth year.

Mining will be from a five-stage openpit with a waste:ore ratio of 4:28. The optimised pit has been modelled in accordance with the PFS base case, except for the inclusion of inferred mineral resources and the reduction in processing costs, owing to grid power.

Potential Job Creation
Once operational, the T3 project is expected to create between 500 and 700 jobs in Botswana, with Australian staff providing technical expertise at the mine.

Net Present Value/Internal Rate of Return
The PFS base case has a pretax net present value, at an 8% discount rate, of $281-million and an internal rate of return of 39%, with a payback of 2.7 years from the start of production. The PFS expansion case has a pretax net present value, at an 8% discount rate, of $402-million and an internal rate of return of 37%, with a payback of 3.3 years from the start of production.

Value
The total initial development capital cost of the PFS base case is estimated at $154.86-million, which includes project contingency of $17.1-million. The total initial development capital cost of the PFS expansion case is estimated at $191.6-million, which includes project contingency of $17.1-million.

Duration
Not stated.

Latest Developments
MOD Resources is expected to make a decision to mine its T3 copper project by the end of March next year, with first production targeted for late 2020.

An updated feasibility study for the project is expected early in 2019.

MOD Resources has incorporated a larger process plant for its T3 resource into the project’s feasibility study, following a 44% increase in the project’s resource estimate.

The updated feasibility study will be based on a plant throughput rate of three-million tonnes a year, up from the 2.5-million tonnes a year considered in the project’s prefeasibility study (PFS), with allowance for staged future expansion.

The throughput selection is based on criteria that include the tonnes of indicated category resource, a targeted mine life of at least ten years, and the optimal operational and financial outcome for MOD.

The T3 pit feasibility study remains on schedule for completion by the end of March 2019, and all key technical consultants are now engaged.

The mineral resource at T3 is estimated at 60-million tonnes grading 0.98% copper and 14 g/t silver for 590 000 t of copper and 27-million ounces of silver.

MOD has secured Azure and Terrafranca as joint debt advisers to secure debt financing for the T3 pit project, following a comprehensive evaluation process that included proposals from debt advisory firms based in the UK and Australia.

The company has also selected Segman as process and infrastructure engineers for the feasibility study.

Key Contracts and Suppliers
Segman (feasibility study process and infrastructure engineers).

On Budget and on Time?
Not stated.

Contact Details for Project Information
MOD Resources, tel +61 8 9322 8233 or email administrator@modresources.com.au.
Metal Tiger, tel +44 207 099 0738 or email info@metaltigerplc.com.