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Copper Mountain Announces Positive Feasibility Study Results for Eva Copper Project

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Copper Mountain Announces Positive Feasibility Study Results for Eva Copper Project

 

 

 

 

 

Copper Mountain Mining Corporation (TSX:CMMC) (ASX:C6C)  is pleased to announce positive results from its Feasibility Study on its 100% owned Eva Copper Project  which is located in Queensland, Australia.

 

 

Feasibility Study Highlights

 

 

Highlights from the Eva Feasibility Study are summarized below.  All costs and values use bank consensus metal prices with long-term metal prices of $3.08 per pound of copper and $1,310 per ounce of gold. The Australian Dollar to U.S. Dollar exchange rates used for years 1 to 3 are 1.40:1 (spot), 1.38:1 and 1.36:1, followed by 1.35:1 long term.  All dollars are in U.S. dollars unless otherwise indicated.

 

 

After-tax Net Present Value (NPV) (8%) $256M
After-tax Internal Rate of Return (IRR) 28%
Annual copper equivalent (CuEq) production first two full years(1) 129M lbs
Annual copper equivalent (CuEq) production (1) (full years 1-9) 98M lbs
Annual copper production first two years 121M lbs
Annual copper production (full years 1-9) 90M lbs
Mine life 12 years
C1 cash cost (per lb of copper produced)(1,2) $1.74
Initial capital cost $350M
(1) Assumes an Australian Dollar to U.S. Dollar exchange rate of 1.35:1 and bank consensus long-term metal prices of US$3.08 per lb of copper and US$1,310 per oz of gold. CuEq is calculated using recoveries of 93% Cu and 78% Au.
(2) Net of by-product credits.

 

 

“The results of the Eva Feasibility Study clearly demonstrate the quality and size of this asset,” commented Gil Clausen, Copper Mountain’s President and CEO. “Eva has the potential to add significant cashflow to our operating base, at one of the lowest capital intensities for near-term greenfield projects anywhere, in the best mining jurisdiction in the world.”

 

 

Mr. Clausen added, “Our intention is to finance the capital spend in a non-dilutive manner through restructuring our current debt and internal cash flow.  We are currently in advanced discussions on debt options and are evaluating the best alternative for shareholders. Until we have a definitive full funding solution in place, which we expect in the coming months, we will not commence construction nor incur large project costs. Our objective is to provide low risk, high value development options to our shareholders and we will be conservative in financing our growth plans.  The organic growth pipeline at Copper Mountain is impressive, and we believe it will be largely financed internally.”

 

 

Mr. Clausen continued, “In addition, this Feasibility Study assumes no benefit from resources in the oxide cap which are treated as waste material. The Company believes that the oxide copper at Eva may be recoverable economically based on preliminary leaching testwork.  A metallurgical testwork program is currently underway and we expect to complete our evaluation in early 2019.”

 

 

Mining and Processing

 

 

The Eva Copper Project is designed as a moderate sized truck/shovel copper-gold open pit mining operation.  The pit designs for the five deposits that comprise the Eva Copper Project, Little Eva, Turkey Creek, Bedford, Lady Clayre and Ivy Ann, were based on a Lerchs-Grossmann optimization at US$2.75 per pound copper price, generated using Measured and Indicated Mineral Resources only.  Mining costs are based on a first-principles model based on locally-sourced costs for major inputs.  Little Eva is comprised of six pushback phases while Turkey Creek and Bedford are each based on two phases.  Lady Clayre and Ivy Ann are each single-phase pit developments.  Pit designs followed geotechnical constraints, with haul road design widths sufficient for the proposed haulage equipment.  The Little Eva pit is mined during the Projects 9-year active mining plan, with Turkey Creek and the smaller satellite pits mining being distributed into the schedule concurrently.  The Little Eva and Turkey Creek pits represent approximately 91% of the Project’s Mineral Reserves.   Mid- and low- grade stockpiles are processed during the last three years of the mine life.

 

 

The mine plan includes production of 334 million tonnes of ore and waste from five deposits over a minimum mine life of 12 years. Total ore mined is expected to be 117 million tonnes and total waste is expected to be 217 million tonnes, for a waste to ore strip ratio of 1.86 to 1.  With an overall sulfide copper recovery of 93% and gold recovery of 78%, the Project’s average annual production is expected to be approximately 90 million pounds of copper and 19,000 ounces of gold, which is equal to 98 million copper equivalent pounds, based on base case metal prices and estimated recoveries. Total copper produced is estimated to be 959 million pounds. Ore will be mined using conventional earth-moving equipment and will be transported to a processing plant via haulage roads.

 

 

The process plan calls for an average throughput of 28,000 tonnes per day (tpd) for the first five years and 25,500 tpd for the remaining life of mine based on the hardness variability incorporated into the geo-metallurgical model of the deposit. The processing plant and tailings management facility will be constructed on site. The flowsheet consists of primary crushing, primary and secondary grinding using a SAG-Ball Mill circuit, followed by flotation process to recover copper and gold in concentrate form. The flotation concentrate will be thickened, filtered and stockpiled for shipping to the Mt. Isa Smelter. Full transportation, smelting and refining costs were based on the Company’s existing long-term contract with Glencore’s Mt. Isa Smelter, which is located approximately 195 kilometres west of Eva.

 

 

The Project is near existing infrastructure with power available through a 220 kV powerline. Water for the operations will be supplied through a well field located near the processing facility, pit dewatering and from water reclaimed from the tailings storage facility located on Company property. The well field has been drilled, pump tested and verified by independent hydrologists as sufficient for the Project’s water consumption needs.

 

 

A summary of mining and production parameters is provided below.  A more detailed life of mine production schedule is available in appendix 1. 

 

 

Total ore mined (kt) 117,041
Total waste (including 14,074 kt of oxide material) (kt) 217,161
Waste to ore strip ratio 1.86:1
Total ore processed (kt) 117,041
Plant capacity 28,000 tpd
Total copper production (klbs) 959,263
Annual copper production (full years 1-9) (klbs) 90,400
Total gold production (oz) 203,000
Annual gold production (full years 1-9) (oz) 18,800
Average copper recovery 93%
Average gold recovery 78%
Average copper feed grade (full years 1-9) 0.45%
Average gold feed grade (full years 1-9) 0.08 g/t
Mine life 12 years

 

 

 

The Measured and Indicated Oxide Mineral Resource, which will be stockpiled separately, represents a significant potential to increase future production and/or extend the mine life at Eva. Total Measured and Indicated oxide resource is 14 million tonnes grading 0.40% copper for 123 million pounds of copper. The Company is currently evaluating the Mineral Resource oxide potential, and the oxide Mineral Resource is not included in the current mineral production schedule. This material has been treated as waste.

 

 

Capital and Operating Costs

 

 

The total initial capital cost for the development of the Eva Copper Project is estimated to be approximately $350 million, which includes a contingency of $31 million.  The capital estimate includes the mining equipment fleet, as the operation is planned to be owner operated.  A breakdown of modelled initial development capital is provided below:

 

 

 
Development Capital (US$M)
Mining $54
Processing $136
Infrastructure $60
Ancillaries $10
EPCM $23
Indirect Costs $23
Owner’s Costs $13
Sub-total $319
  Contingency $31
Total Capital $350
     

 

 

Sustaining capital for the life of mine is estimated to be approximately $27 million.

 

 

Average C1 cash cost, net of by product credits, is approximately $1.74 per pound of copper. Total operating costs are estimated to be $14.53 per tonne milled. Total mining costs are estimated to be $4.11 per tonne milled and $1.44 per tonne mined.

 

 

   
Cash operating cost (US$ per tonne milled)  
  Mining $4.11
  Processing $7.35
  G&A $0.65
  Transportation $1.13
  Royalty $1.29
Total $14.53

 

 

Project Economics

 

 

The after-tax NPV assuming an 8% discount rate is $256 million and the after-tax IRR is 28%.  The economics use bank consensus metal prices with long-term metal prices of copper price of $3.08 per pound and gold price of $1,310 per ounce. The Australian Dollar to U.S. Dollar exchange rates used for years 1 to 3 are 1.40:1 (spot), 1.38:1 and 1.36:1, followed by 1.35:1 long term. 

 

 

A sensitivity analysis on varying copper prices and other variables was completed on the after-tax NPV (8%) and the results are summarized below. 

 

 

   
Copper Price (per lb) After-tax NPV (8%)
$2.75 $121M
$3.08 (long-term consensus) $256M
$3.50 $404M
   
Capital Costs After-tax NPV (8%)
-10% $287M
Base Case $256M
+10% $225M
   
Operating Costs After-tax NPV (8%)
-10% $259M
Base Case $256M
+10% $231M
   
Australian to U.S. Dollar Exchange Rate After-tax NPV (8%)
-10% $212M
Base Case $256M
+10% $292M

 

 

 

Mineral Reserves and Mineral Resources

 

 

The Eva Mineral Reserve is included in the Eva Mineral Resource and the effective date of the Mineral Reserve and Mineral Resource is September 15, 2018.  The Mineral Resource is based on all drilling up to July 15, 2018. A summary of the Mineral Reserve and Mineral Resource is provided below.

 

 

Eva Mineral Reserves (Sulfide Only)
  Tonnes

(t 000)

Copper
Grade (%)
Gold Grade
(g/t)
Contained
Copper (M lbs)
Contained

Gold (oz 000)

Proven 61,144 0.41 0.07 556 131
Probable 55,893 0.39 0.07 475 129
Proven and Probable 117,037 0.40 0.07 1,031 260
Mineral Reserve Notes:
1. CIM Definition Standards were followed for Mineral Reserves.
2. Mineral Reserves were generated using the August 31, 2018 mining surface.
3. Mineral Reserves are reported at an NSR cut-off value of US$8.95/t for Little Eva and Turkey Creek, US$9.35/t for the Bedford pits, US$10.32/t for Lady Clayre pits, and US$11.44/t for Ivy Ann.
4. Mineral Reserves are reported using long-term copper and gold prices of US$2.75/lb and US$1,250/oz, respectively.
5. An average copper process recovery of 93%, and gold process recovery of 78% were used for all deposit areas.
6. Little Eva, Turkey Creek, Bedford, and Lady Clayre have an equivalent 5.3% NSR royalty.  Ivy Ann has an equivalent 5.8% royalty.
7. Average bulk density is 2.7 t/m3.
8. Totals may not add due to rounding.

 

 

 

Eva Mineral Resources
Sulfide
  Tonnes

(t 000)

Copper
Grade (%)
Gold Grade
(g/t)
Contained
Copper (M lbs)
Contained

Gold (oz 000)

Measured 69,829 0.40 0.07 621 160
Indicated 81,292 0.36 0.07 639 172
Measured and Indicated 151,121 0.38 0.07 1,259 330
Inferred 22,368 0.35 0.07 174 53
 
Oxide
  Tonnes

(t 000)

Copper
Grade (%)
Gold Grade
(g/t)
Contained
Copper (M lbs)
Contained

Gold (oz 000)

Measured 7,255 0.38 0.07 61 16
Indicated 6,818 0.42 0.06 59 13
Measured and Indicated 14,074 0.40 0.07 123 30
Inferred 2,998 0.40 0.05 26 5
Mineral Resource Notes:
1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources are reported at a cut-off grade of 0.17% Cu for copper.
3. Mineral Resources are inclusive of Mineral Reserves.
4. Mineral Resources are estimated using a copper price of US$3.52/lb, and a gold price of US$1,600 per ounce.  An US$/AU$ exchange rate of AU$1.35 = US$1.00.
5. Bulk density ranges from 2.4 t/m3 to 3.00 t/m3.
6. Numbers may not add due to rounding.

 

 

 

Technical Report

 

 

A technical report for the Eva Copper Feasibility Study will be filed on SEDAR within 45 days of the date of this news release in accordance with NI 43-101 regulations.

 

 

Qualified Persons

 

 

The Mineral Resource estimate for the Eva Copper Project was prepared by Copper Mountain Mining Corporation in accordance with standards as defined by the Canadian Institute of Mining, Metallurgy and Petroleum “CIM Definition Standards-For Mineral Resources and Mineral Reserves”, adopted by CIM Council on May 10, 2014. Messrs. Gerry Schwab, P.Eng., Andre de Ruijter, P.Eng., Alistair Kent, P.Eng., Peter Holbek, B.Sc (Hons), M.Sc. P. Geo, and Stuart Collins, P.E., serve as Qualified Persons as defined by National Instrument 43-101 for the Technical Report related to the Eva Copper Project. Mr. Stuart Collins, who is independent of the Company, is the Qualified Person for the Mining and Mineral Reserve. Mr. Peter Holbek is the Qualified Person for the related Mineral Resource. Mr. Andre de Ruijter, who is independent of the Company, is the Qualified Person for the Ore Processing. Mr. Alistair Kent, who is independent of the Company, is the Qualified Person for the Development Capital Estimate. Mr. Gerry Schwab, Mr. Andre de Ruijter, Mr. Alistair Kent, Mr. Peter Holbek and Mr. Stuart Collins have reviewed and verified that the technical information related to the Eva Copper Project in this news release is accurate.

 

 

About Copper Mountain Mining Corporation:

 

 

Copper Mountain’s flagship asset is the 75% owned Copper Mountain mine located in southern British Columbia near the town of Princeton. The Copper Mountain mine produces about 90 million pounds of copper equivalent per year with a large resource that remains open laterally and at depth. Copper Mountain also has the permitted, development stage Eva Copper Project in Queensland, Australia and an extensive 397,000 hectare highly prospective land package in the Mount Isa area. Copper Mountain trades on the Toronto Stock Exchange under the symbol “CMMC” and Australian Stock Exchange under the symbol “C6C”.

 

Posted October 1, 2018

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