Austral Resources Australia Ltd (ASX:AR1) has received an initial evaluation of the economics of mining the copper resource at the company’s 100 per cent owned Lady Colleen Project, located on an existing granted mining lease.
The independent scoping study, prepared by CSA Global, indicated that construction of an open cut mine at Lady Colleen was viable.
Austral has identified clear opportunities for improvements in cost economics and intends to evaluate these opportunities through a pre-feasibility study.
Production rate and mine life are expected to grow with continued resource definition and extensions – the current study includes production from a mineral resource of approximately 44,000 tonnes of copper at a cut-off grade of 0.7 per cent.
The study’s positive economics are reflected in the pre-tax internal rate of return (IRR) of approximately 38 per cent over approximately 5 years and pre-tax net present value of $60 million – ranging from $15 million to $94 million, with a median estimated value of $55 million.
Further key metrics coming out of the Scoping Study include:
- Total copper production of approximately 44,000 tonnes from both heap leach and flotation processing methods.
- Payback period of approximately 2.6 years at C1 costs and copper sales price of $12,000.
- C1 operating costs of approximately US$2.78 per pound.
Lady Colleen’s current total Mineral Resource is 2.8 million tonnes at 1.9 per cent copper (at a 0.7 per cent cut off), which is part of Austral’s current total JORC Mineral Resource Estimate of 420,000 tonnes.
Austral plans to follow through on key recommendations coming out of the independent scoping study to further improve the economics of the proposed mine, including:
- Further drilling aimed at upgrading the remaining 9 per cent inferred mineral resources to indicated.
- The high-grade core of the Lady Colleen Mineral Resource is currently open along strike and down plunge, with exploration success from the drilling planned in 2023 with the potential to increase the resource base of the Lady Colleen Project.
- Optimise pit wall angles to minimise waste movement requirements.
- Progress metallurgical test work to increase level of confidence in recoveries.
- Hydrogeological/hydrological work to estimate the aquifer water inflows and their effect on the pit walls.
- Detailed estimation of sink rates determining the production rates in the next stage compatible with industry standards.
- Estimate the capital costs, operating costs, royalties, tax and payments.
- Ongoing conversion of Mineral Resources into proven and probable Ore Reserves.
Austral’s Managing Director and CEO Dan Jauncey said the scoping study results had exceeded the company’s expectations and demonstrated the significant potential of the project.
Jauncey continued: “The overall performance of the project opportunity is a direct consequence of our team’s unwavering efforts to prove up the economic viability of the current proven copper resource at Lady Colleen.
“With the base case for building the mine now delivered, we are quickly moving to add to this exciting development.
“Our team is now progressing additional exploration activities that are expected to further upgrade the mine resource, and flowing from this, viability metrics.
“Ahead of any such upgrades, the initial study’s findings have already increased the chance of the robust and economically viable copper sulphide deposit at Lady Colleen being developed.
“A mine there will provide a material boost to Austral’s revenue base [and] it would further cement our position as both a copper producer and an explorer with a still highly prospective project book.”
