Caravel Minerals has unveiled the results of a scoping study for its Caravel copper project, saying it touts a 23 year mine life.
The project, located in Western Australia’s Wheatbelt region, has a mineral resource that totals 662 million tonnes at 0.28 percent copper for 1.86 million tonnes of contained copper. The scoping study was based around these numbers.
Production from the mine is set for an initial run of 16 million tonnes of ore per year (Mtpa) for the first five years, which will later ramp up to 30 Mtpa after the sixth year of operations.
The first five years will see approximately 45,000 tonnes of copper produced per year, with output from the sixth year onward coming in at 65,000 tonnes annually.
While initial capital expenses are docketed at AU$481 million, the company maintains that it can repay that amount within the first four years of production at Caravel.
“Caravel has used a conservative long-term average copper price of US$6,612 per tonne in the scoping study to calculate a pre-tax NPV of AU$1.05 billion at a 7 percent discount rate,” Caravel Managing Director Steve Abbott said in a statement.
“C1 cash costs of US$1.45 per pound place the Caravel copper project in the second quartile of copper producers for the first 5 years, positioning the project to be a low- to mid-cost operator over its life.”
The ramp up to 30 Mtpa in year six is set to cost an additional AU$256 million in year five, though the company did not comment on a payback timeline for those costs. The project’s post-tax internal rate of return has been estimated at 20 percent.
Going forward, the company is planning to proceed with what it calls “more advanced” feasibility studies, including a prefeasibility study and a definitive feasibility study. Caravel anticipates reaching a decision to mine by mid-2021.
Caravel’s share price jumped by 6.98 percent on Wednesday (May 29) following the announcement, climbing to a closing price of AU$0.046 on the ASX.
As of Tuesday (May 28), copper was trading at US$5,956 per tonne on the London Metal Exchange.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.