Last checked at 1 Aug 2019 07:00
Phoenix Copper Limited / Ticker: AIM:PXC / Sector: Mining
1 August 2019
Phoenix Copper Limited ("Phoenix" or the "Company")
Completion of new Empire Mine Economic Model
Phoenix Copper Ltd (AIM: PXC; OTCQX: PGMLF), the North American-focused base and precious metals exploration and development company, is pleased to announce that it has completed a new economic model for the Empire Mine open pit heap leach SX-EW project in Idaho, USA.
Highlights:
- Average annual production of 7,665 tons copper equivalent (7,000 tons copper and 1,600 tons zinc) over the life of the mine (with initial production of 8,600 tons per annum)
- 11-year mine life, including processing of lower grade stockpile, leaching 1.6 million tons per annum
- Initial head grade of 0.60% copper
- Initial capital cost of $51 million
- Life of mine copper equivalent cash cost of $1.72/lb ($1.33/lb in early years)
- Life of mine EBITDA of $202 million and profit after tax of $177 million at $3.25/lb copper
- 7% NPV of $55.5 million post-tax and IRR of 33% at $3.25/lb copper
- 7% NPV of $25.5 million post-tax and IRR of 20% at $2.75/lb copper
Background
This new economic model, which has been prepared with Hard Rock Consulting LLC of Lakewood, Colorado, has been derived following the publication in May 2019 of an updated NI 43-101 compliant resource, which incorporated the 8,600-metre 2018 Empire drilling programme results. The new economic model uses current market data and will form the basis of the feasibility study currently underway and scheduled for completion in Q2 2020.
Further mine planning and optimization has resulted in an economic model based on ore production of 1.6 million tons per annum over an initial 9-year mine life, with an additional 2 years of low-grade ore processing at the end of mining. This model does not take into account recovery of gold and silver, but does now include zinc recovery.
The Company has used the pit production schedule prepared by Hard Rock Consulting, and production, capital and operating cost estimates prepared by Phoenix staff in conjunction with Hard Rock Consulting.
The model is summarised below and can also be found on the Company's website at www.phoenixcopperlimited.com.
Dennis Thomas, CEO of Phoenix, commented:
"I am pleased to report that, following our drilling campaigns in 2017 and 2018, Hard Rock Consulting completed an update of the resource calculation. Based on these new resources, mine planning and scheduling was completed by Hard Rock Consulting. This economic model is is developed from these new resources and production schedule.
"The production schedule uses two copper cut-off grades to ensure higher grade ore is fed to the heap leach pad first. An increase in the initial pad grade has allowed the mine production rate to be reduced from 2.25 million tons a year in the April 2018 economic model to 1.6 million tons, resulting in a reduction in the pre-production capital cost from $68 million to $51 million. We believe the copper price will improve in the medium term which is the largest sensitivity in this project, given that with each $0.25 increase in the copper price, a further $15 million of value is added to the project.
"Based on this model we are continuing with the Feasibility Study, scheduled for completion in Q2 2020, and look forward to commencement of mine production of copper and zinc in late 2021. In due course, we will look to expand and extend the project. We will also continue to evaluate the wider Empire district which now comprises a total of 23 square kilometres of mineralised claims staked along a 5.4-kilometre strike length from the Empire oxides, as well as the Navarre Creek precious metals zone,
"We view this initial open pit project at Empire very much as a "starter mine" in a significant mineralised area that also contains the high grade Red Star discovery, the deeper underground sulphide orebody at Empire and three other historic producing mines.".
Empire Mine Cash Flow Summary | ||
PRODUCTION | ||
0.325% Cu cut-off | tons | 12,794,000 |
% copper | 0.60 | |
% zinc | 0.21 | |
0.20 % to 0.325% Cu cut-off | tons | 5,181,000 |
% copper | 0.27 | |
% zinc | 0.14 | |
Total ore | tons | 17,975,000 |
Total Tons ore & waste | tons | 53,235,000 |
Contained copper | lbs | 180,363,000 |
Contained zinc | lbs | 66,181,000 |
Contained copper | tons | 90,182 |
Contained zinc | tons | 33,091 |
Copper Recovery | % | 76 |
Zinc Recovery | % | 50 |
Scheduled Ore Production | per day | 4,000 |
Scheduled Ore Production | per year | 1,600,000 |
Mine life | years | 11 |
Average annual copper production years 1-9 | tons | 7,000 |
Average annual zinc production years 1-9 | tons | 1,600 |
Plus leaching low grade stockpile | years | 9 to 11 |
LOM copper cathode produced | tons | 68,500 |
LOM zinc produced | tons | 16,500 |
REVENUE | ||
LOM average Cu price | $/lb | 3.25 |
LOM average Zn price | $/lb | 1.35 |
LOM net revenue after royalties, freight, insurance & TC | $ | 461,346,000 |
Revenue | S/ton ore | 26.11 |
OPERATING COSTS | ||
LOM operating costs | $ | 259,253,000 |
LOM ave operating cost | $/ton ore | 14.69 |
LOM ave operating cost | $/lb Cu Equ | 1.72 |
LOM EBITDA | $ | 202,093,000 |
CAPITAL COSTS | ||
Pre production capital costs | $ | 50,578,000 |
LOM Sustaining capital costs | $ | 25,306,000 |
PROFIT AFTER TAX | ||
LOM Federal & State tax | $ | 24,757,000 |
LOM profit after tax | $ | 177,336,000 |
Ave annual after tax profit in years 1 to 5 | $ | 21,940,000 |
Ave annual after tax profit in years 6 to 11 | $ | 11,273,000 |
RESULTS | ||
Cu $/lb | NPV (7%) US$ | IRR % |
3.75 | 85,444,479 | 45% |
3.50 | 70,450,899 | 40% |
3.25 | 55,457,319 | 33% |
3.00 | 40,463,738 | 27% |
2.75 | 25,470,158 | 20% |
Qualified Person
The information in this announcement has been reviewed by Roger Turner A.C.S.M., M.Sc., M.I.M.M.M., C.Eng., Chief Technical Officer and Director of the Company. Mr Turner is a graduate mining engineer from the Camborne School of Mines with an MSc in Economic Geology from Leicester University with more than 40 years' experience in mine development, construction and operation and is a qualified person under the AIM Rules. Mr Turner consents to the inclusion of the information in the form and context in which they appear.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
**ENDS**
Contacts
For further information please visit www.phoenixcopperlimited.com or contact:
Phoenix Copper Limited | Dennis Thomas / Richard Wilkins | Tel: +44 7827 290 849 (Dennis) / +44 7590 216 657 (Richard)
|
SP Angel (Nominated Adviser and Joint Broker)
| Lindsay Mair / Caroline Rowe | Tel: +44 20 3470 0470 |
Brandon Hill Capital (Joint Broker) | Jonathan Evans / Oliver Stansfield
| Tel: +44 20 3463 5000 |
Medea Natural Resources Ltd (Financial Advisor) | Leonidas Howden / Fred White | Tel: +44 20 7770 6926 |
Blytheweigh (Financial PR) | Tim Blythe / Camilla Horsfall / Megan Ray | Tel: +44 20 7138 3204 |
Notes
Phoenix Copper Limited is a North American focused, base and precious metal explorer and developer, which is fast-tracking the historically-producing Empire Mine in Idaho, USA, back into production, and exploring for cobalt in Idaho.
Phoenix's flagship project is a brownfield, past producing, copper, gold, silver, zinc and tungsten underground mine, the Empire Mine near Mackay in Idaho. Phoenix acquired an 80% interest in the property in 2015. Based on a total of 320 drill holes an oxide resource was completed in late 2017. A NI 43-101 compliant PEA (preliminary economic assessment) for an open pit heap leach solvent extraction and electrowinning ("SX-EW") mine was completed in April 2018. In June 2018 a drilling campaign consisting of 8,600 metres in 93 holes was started and completed in late 2018. This programme was designed to upgrade and increase the oxide resources, provide samples for ongoing metallurgical testwork, geotechnical and hydrological studies and condemnation drilling for the heap leach pad site, waste dump and plant site. An updated NI 43-101 compliant resource was completed in early May 2019 which resulted in an increase from the PEA resources of 37% contained copper and 108% contained zinc. This resource has been used for this economic analysis and will now be used as the basis for the Bankable Feasibility Study ("BFS") scheduled for completion in mid 2020.
At Empire, it is estimated that only 1 to 2% of the potential ore system has been explored to date and, accordingly, there is significant opportunity to increase the resource through phased exploration; the current resources relate to the oxide resource only, with the exception of the Red Star discovery "Inferred" resource, which remains open along strike and does not include the deeper, higher grade sulphides. In addition, Phoenix has increased the claim area from 818 acres at the time of its acquisition to 5,717 acres, mainly to the northwest and west, and in so doing has increased the potential for additional oxide and sulphide resources by a total strike length of approximately 2,500 metres towards another brownfield mine, the Horseshoe Mine, which is now within the property boundary.
The Company also holds two prospective cobalt properties in Idaho, US, which are located north of the Empire Mine. These are situated close to the town of Cobalt and are close to projects being advanced by Canadian junior miners, including eCobalt Solutions and First Cobalt. Fieldwork, consisting of mapping and sampling and locating drill holes for the 2019 drilling programme, has been completed.
With a management team that has successfully constructed, commissioned and operated mines and low risk, mining-friendly jurisdictions with excellent infrastructure, Phoenix is looking to fulfil its ambitions to become a mid-tier base metal, precious metal and cobalt production company, offering exposure to high value and high demand metals with compelling demand/supply fundamentals.
More details on the Company, its assets and its objectives can be found on PXC's website at www.phoenixcopperlimited.com.