PERTH (miningweekly.com) – An updated economic assessment into the Kanmantoo underground copper mine, in South Australia, has estimated that the Stage 1 operation could deliver free cash flows of up to A$205-million from the restart of operations in 2023.
The economic assessment estimated that the project could be brought online at a capital cost of A$25-million, and could produce 43 500 t of copper and 11 500 oz of gold over an initial 45-month mine plan.
The project’s net present value has been estimated at A$165-million and its internal rate of return at 231%, with a pay-back period of nine months.
“The updated study reaffirms the excellent project potential. The Kanmantoo underground Stage 1 presents a unique opportunity to produce copper in a Tier 1 jurisdiction, generating post-tax cash flows in excess of A$200-million in the initial stage,” said Hillgrove MD and CEO Lachlan Wallace.
“With all infrastructure and permitting in place, the project is well positioned for a fast, low capital restart, with first copper production only seven months from commencement. The resource potential is exciting, with 143 mineralised intersections from 122 holes, resulting in the increase in mineral resources from less than one-million tonnes in 2019, to almost seven-million tonnes in 2022. Such high exploration strike rate and resource conversion provides confidence that further drilling may result in increased resources and an expansion in the mine plan,” said Wallace.
“The project is highly leveraged to rising copper prices. The underground stopes are designed to cut-off grades based on the current copper price. Many of these stopes terminate whilst still within a lower grade copper halo around the higher grade core. At higher prices, there is potential to grow the existing plan by simply widening stopes for relatively low incremental cost. With mill capacity at only 40%, and excess tailings storage capacity, additional mineralised material can be processed without displacing any high grade.
“And finally, it is a testament to the robustness of the project, that in an inflationary environment, the project has increased in both mine life and projected value, whilst also reducing further what was already one of the world’s lowest capital intensity copper development opportunities.”