There is nothing new about the Whim Creek copper mine in Western Australia’s north, but there are three reasons for investors to take a fresh look at an old mine under new management, which is also backed by a global mining giant and armed with a unique value-creating processing technology.
First copper was mined in the area, which lies roughly halfway between Port Hedland and Karratha, more than 120 years ago, and after repeated ownership changes, control now rests with a relatively new ASX-listed company, Anax Metals (ASX: ANX).
Thinly traded and with a stock-market value of $26 million Anax is a genuine small cap, but it’s also a business with two very interesting corporate friends – the South African born but London-based, Anglo American, and Venturex Resources (ASX: VXR), the new corporate interest of Bill Beament, the man who built Northern Star (ASX: NST) into an Australian gold leader.
And then there’s the location of Anax’s Whim Creek tenements which adjoin the rapidly expanding Mallina gold project of De Grey Mining (ASX: DEG).
There’s also Anax’s technology which is being tested on ore extracted from two of the old mines now under its control, Whim Creek itself, and the nearby Mons Cupri.
X-Ray Transmission Sorting
What Anax is trialling, with encouraging results so far in a proof-of-concept process, is an ore sorting system which has its roots in waste recycling and diamond mining with the essential benefit being that it separates strongly mineralised material from low-grade rocks using X-Ray Transmission sorting (XRT).
An example of what XRT can achieve is the upgrading of a sample of ore from Mons Cupri, which assayed 3.45% copper at the start of the process, emerging at 6.15% copper – with a similar doubling effect on gold, zinc and lead found in the ore.
The technology, developed by Norwegian-based Tomra was originally used to help sort industrial waste using sensors to identify metals travelling on a conveyor belt with pinpoint blasts of compressed air separating different materials.
Diamond miners use the technology because diamonds fluoresce under X-Rays which makes them easy for a computer-controlled sensor to identify and flick them off a conveyor belt with a jet of air.
It works on Whim Creek copper and zinc ore because the X-Ray technology is able to identify denser ore with a high specific gravity from less dense and therefore less mineralised material.
Anax managing director Geoff Laing said that potential doubling of the ore grade before more conventional processing would have significant financial benefits to the redevelopment of Whim Creek.
“We envisage a simple, low cost, operation based on mining, crushing, sorting and leaching on an existing pad installed by one of the previous owners of the project, Straits Resources,” Laing said.
“We can see a clear path to production because the project is amenable to open pit mining at Mons Cupri and Whim Creek, and underground mining at Salt Creek.”
Exploration should expand the resources under Anax’s control with total copper ore currently measured at 8.25 million tonnes grading 1.03% copper, while the zinc-rich material totals 1.275Mt at 6.63% zinc.
Those resource estimates predate recent drilling at Mons Cupri designed to obtain ore sorting and metallurgical samples with best results that included 42m at 2.34% copper from a depth of 43m, and 11m at 5.01% zinc from 32m.
Useful as a starter project for a company the size of Anax, Whim Creek is not big enough for Venturex, which Beament wants to grow into a significant copper producer, which is why he engineered a sell down that sees Anax hold 80% of a joint venture covering the project area, and Venturex retaining a 20% stake.
Anglo American lured by WA copper
Anglo American enters the picture as a business keen to get in on the ground floor of a copper revival in a region of Australian showing potential after decades of dominance by iron ore producers.
The re-awakening of the Pilbara as a source of base metals (copper and zinc) and precious metals (gold and silver) is one of the more significant recent developments in Australian mining.
While Anglo American is not a newcomer to the region having tried (and failed) to master the complex geology of the Blue Spec goldmine in the 1980s the lure of copper as a metal in strong and growing demand has attracted it to Anax and the Whim Creek region.
A multi-staged deal has seen Anglo American inject an initial US$2 million into Anax in exchange for a 1% net smelter return and agree to a project funding package of up to US$20 million and an offtake agreement for future Whim Creek production.
Anax’s growth strategy
Laing said Anax was working on a two-phase growth strategy with one phase of the work focused on a mining re-start after upgrading existing plant and equipment left by Straits when it sold the project to Venturex in 2009 – a time when copper was selling for around US$2.50 a pound, well below its current US$4.22/lb.
The second part of the growth strategy is to expand exploration across the company’s tenements in the region with a focus on gold potential.
After raising $4.7 million in March through a share issue priced of $0.068, Anax has sufficient cash in hand to move ahead with its growth plans, though it is a company yet to attract the attention of investors having suffered a price slide from $0.11 to $0.072 over the past month.
Redeveloping old mines is always a high-risk strategy, but what Anax has going for it is a ground position close to one of Australia’s best recent gold discoveries (De Grey’s Mallina project), a copper resource in the ground, and two well-connected associates in Anglo American and Venturex.