MOD Resources, listed on the ASX and LSE, has announced what it describes as the “compelling results” of the completed Feasibility Study (FS) for the T3 copper project in Botswana. The project will comprise an 11,5-year open-pit mine, a 3 Mt/a conventional processing plant and all associated infrastructure.
The FS estimates a Life of Mine (LoM) revenue of US$2,3 billion and EBITDA of US$1,1 billion, an NPV (pre-tax) of US$368 million and an IRR of 33 %, based on a long-term consensus copper price of US$3,08/lb Cu and an 8 % real discount rate. The project would generate pre-tax free cash flows of US$777 million, inclusive of development capital. LoM All-In Sustaining costs (AISC) are estimated at US$1,56/lb Cu after deducting silver credits.
Process plant layout (developed for FS).
“The strong economics clearly demonstrate the value of this high-quality asset located within the excellent mining and investment jurisdiction of Botswana,” comments Julian Hanna, MD of MOD. “There are a number of outstanding operational and financial outcomes of the Feasibility Study; however, several stand out when compared to other emerging global copper developers and producers.
“Firstly, the T3 project represents a relatively straightforward open-pit mine and processing plant, requiring moderate capital expenditure to bring into production. Then, due to the very favourable geometry, grade and metallurgical characteristics of the orebody, the Feasibility Study has demonstrated that even at copper prices much lower than today’s spot price, the T3 copper project is expected to generate excellent returns.
“T3 also provides the possibility for future production expansion from other potential deposits in the surrounding area, where MOD has already demonstrated early drilling success. Drilling is expected to focus on this satellite potential during 2019 to take advantage of the capital invested into T3.”
The T3 project, which is 100 %-owned by MOD, is a significant new sediment-hosted copper and silver deposit in the under-explored Kalahari Copperbelt in Botswana. Over the past three years, MOD has progressed T3 from the discovery drill hole, announced in March 2016, to completion of the FS.
The FS has identified that the T3 project is underpinned by strong fundamentals including an orebody geometry that facilitates a simple, six-stage, open-pit design and metallurgy that requires a relatively moderate capital investment, producing high-grade copper concentrates.
It is envisaged that mining will be undertaken by a contractor using conventional equipment to support an average annual mining rate of 3,0 Mt/a of ore with a LoM strip ratio of 5,7 to 1. Load and haul would utilise 120-250 tonne excavators and 140 tonne capacity haul trucks mining on approximately 2,5 m-high flitches in ore zones and approximately 3,5 m-high flitches in bulk waste zones. Pit dewatering is expected to be minimal and will be managed by a collection of external dewatering and depressurising bores (if required) and in-pit sumps for use within the mining operation
Pre-strip activities are expected to commence during the first half of 2020 and ore from the first stage of the open pit is targeted to be processed during the first quarter of 2021. The bulk of waste movement is expected between 2020 and 2024, resulting in a higher strip ratio during these early years. Following this, the strip ratio will reduce to an average of 2 to 1 and mining costs should follow this general downward trend.
The open pit is located less than 1 km from the process plant. Ore will be either directly fed into the primary crusher or directed to a ROM stockpile, providing surge capacity and the opportunity for ore blending.
The T3 orebody is comprised of metallurgically favourable chalcopyrite, bornite and chalcocite. Ore will be processed through a conventional process plant with an annual throughput of up to 3,2 Mt at a head grade of 1,0 % copper and 13,2 g/t silver. The flow sheet includes a primary crusher/SAG/ball mill comminution circuit to achieve a grind size of P80 180 µm, a natural pH flotation circuit, rougher flotation with a regrind circuit to achieve a grind size of P80 90 µm and a cleaner flotation circuit.
LoM metallurgical recoveries of 92,9 % copper and 88,0 % silver are envisaged, producing a concentrate with grades that peak at 34,7 % Cu and 601 g/t Ag, averaging 30,4 % Cu and 383 g/t Ag.
Average annual production over the life of mine is expected to be approximately 28 kt of copper and 1,1 Moz of silver. However, for the first seven full years of production (between 2021 and 2028), plant throughput, feed grades and recoveries are expected to be higher than the LoM average and support copper production averaging over 30 kt.
The current estimated direct and indirect capital cost for the establishment of the mine, the construction of the process plant and associated infrastructure is US$142 million (excluding mining pre-strip costs).