Caravel Minerals releases revised scoping study for namesake copper project

Exploration company Caravel Minerals (ASX: CVV) has released a revised scoping study for the Caravel copper project in Western Australia, as part of pre-feasibility work for the development.

Replacing the original 2019 document, the new study is based on a mineral resource of 662 million tonnes at 0.28% copper for 1.86Mt contained copper (using a 0.15% cut off grade); and the establishment of conventional open pit and mineral processing infrastructure to produce copper concentrate for road transport to port.

The project will have an initial plant throughput of 12Mt per annum and a copper output of 35,000tpa over the first five years, ramping up to 24Mtpa throughput from year six for 55,000tpa copper.

The first five years of mining will take place within starter pits at the large Bindi deposit to ensure early access to higher-grade ore, delivering 59Mt at a strip ratio of 0.43:1 to the mill for processing.

Scoping study updates

Engineering services firm Ausenco was contracted in May to review the original scoping study parameters and update a range of assumptions relating to mineral processing, capital expenditure, operating costs and revenue forecasts.

Modifications were made to the process flowsheet to incorporate a semi autogenous grinding (SAG) mill with pebble crusher comminution circuit in preference to the previously-envisaged high pressure grinding roll (HPGR).

The new flowsheet comprises a standard crush-grind-float circuit for the production of copper concentrate for export and aims to provide a faster return on capital, higher throughput and the opportunity for pebble rejection.

Site and plant layouts

The study produced a site layout suitable for start-up operations and future expansion, including an equipment flowsheet to accommodate the planned processing increase from 12Mtpa to 24Mtpa after the first six years.

Ausenco also updated the plant layout and equipment list based on the revised flowsheet and incorporated other improvements in materials and labour costs to reflect recent cost increases across the resources industry.

While the new flowsheet and plant layout produced considerable savings on the 2019 scoping study, higher labour and materials costs resulted in an overall capital expenditure increase of $94 million to a new total of $576 million.

Operating costs

Operating costs were recalculated based on the revised flowsheet, plant layout and updated rates for labour and consumables.

While cost assumptions for power prices remained the same, a change to the SAG circuit resulted in higher consumption of power and increased consumption of grinding media.

Mining costs have not been re-estimated however a provision has been made for expected cost increases due to rising fuel and labour prices.

Overall unit costs increased from $11.71 per tonne milled to approximately $14.42 per tonne milled.

Commodity prices

Caravel said the revised scoping study reflected an increase in commodity prices since the 2019 version was published.

It adopts a base case copper price assumption of US$4.00 per pound, within a range of US$3.60/lb to US$4.40/lb, compared to US$3/lb used in the original study.

The company said the new price assumption was conservative when balanced against higher forecasts based on “exceptionally strong pricing conditions” for the year to date, as well as low inventories, momentum shifts in economic recovery, stimulus packages and the expectations of increased medium-term global demand due to carbon reduction energy policies.

Project funding

Based on current market conditions and the result of project feasibility studies, Caravel said there were “reasonable grounds to believe” the project could be financed by a combination of debt and equity.

Debt may be secured from several sources including Australian and international banks, the high yield bond market and resource credit funds, in conjunction with product sales of offtake agreements.

Alternative options, such as corporate transactions, joint ventures or partial asset sales may also be considered to generate the necessary funding.

Greenfield development

The Caravel copper project is a greenfield conventional open cut mining and processing development, 150 kilometres northeast of Perth.

Last year, Caravel completed 34,230m of drilling predominantly at the large Bindi deposit aimed at expanding the resource and identifying zones of higher-grade mineralisation which could be accessed through an early mine schedule.