Mining

Cyprium Metals propelling Nifty reopening as huge copper deficit forecast

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By Robin Bromby - 
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By 2030, according to Norwegian-based research firm Rystad Energy, the world will be facing an acute copper shortage, with demand outstripping supply by 6 million tonnes per annum.

Copper demand is going to see a 16% rise in consumption over the next eight years, propelled by the global electrification momentum.

Some 75% of mined copper is used in electrical wires, power grids and motherboards.

At the same time, copper discoveries and mine developments have been lagging.

New life for major Australian copper mine

Enter Cyprium Metals (ASX: CYM) and its Western Australian copper projects.

And in particular, the Nifty copper mine, located on the western end of the Great Sandy Desert in the northeast Pilbara region — about 350km from Port Hedland.

It has a resource of 732,200 tonnes of contained copper.

The mine has a long history. The deposit was discovered in 1981 by the former WMC, with drilling in 1983 of the oxide resource leading to the discovery of the deeper sulphide body.

Ten years later WMC began an open pit, heap leach operation, mining the relatively high-grade oxide resource.

In 1998, the mine was bought by the former Straits Resources, with that company expanding production.

Yet another owner came along in 2003: the India-controlled Aditya Birla Minerals, which in 2004 began underground development to access the sulphide resource.

That company was taken over in 2016 by Metals X (ASX: MLX).

Mine life will be extended

Now, it’s in the hands of Cyprium.

In a recent client note on the company, Evolution Capital described its Nifty project as having “a chequered past with various owners and a tricky underground mine plan”.

It noted that Cyprium’s strategy of focusing on open pit mining of the oxide ore, then later the sulphide ore, is far less risky than previous efforts.

The oxide project is planned as the first stepping stone, with production of 25,000tpa of copper cathode.

Costs well below current price

Cyprium’s re-start study was based on a copper price of US$4.08 per pound (A$5.83/lb), with a direct cash cost of US$1.91/lb (A$2.72/lb) and a fully allocated cost of US$2.82/lb (A$4.01/lb).

Even with the recent fall of the copper price, Friday’s close at US$4.26/lb (A$6.06/lb) still leaves a comfortable margin.

In its most recent quarterly report, Cyprium noted that it was talking to potential financiers who are going over the company’s re-start study and data.

The project is expected to have a free cash flow of $544 million and a three-year payback period.

Other copper projects in pipeline

Apart from Nifty, Cyprium owns 100% of the Maroochydore copper project, which has a resource of 48.6Mt at 1% copper, for a contained 486,000t of metal.

There is also the Murchison copper project which includes the Hollandaire resource of 2.8Mt at 1.9% copper, with a contained 51,500t along with 28,000 ounces of gold and 500,000oz of silver.

While the copper price has dropped in recent weeks, closing at US$9,414/t (A$13,398/t) on Friday — and falling below US$9,500/t (A$13,520/t) for the first time in 2022 — some analysts are seeing this as a temporary pullback.

Chinese demand expected to rebound

A reduction in demand from German industries has been the latest setback for the copper price, coming on top of the COVID-19 lockdowns in China, a country that consumes about 55% of the world’s copper.

In a report out this morning, however, Commonwealth Bank (ASX: CBA) commodity analyst Vivek Dhar says he expects copper to get support later this year.

Some 21% of copper goes to electricity networks, and these are expanding to reach new renewable energy generators that need to be connected to grids.

CBA expects Chinese demand to recover somewhat in the second half of 2022.