Up-and-coming copper developer MOD Resources (ASX: MOD) has published its long-awaited Pre-Feasibility Study (PFS) results at its proposed open-pit mine in Botswana.
Having discovered the T3 deposit in 2016 and finalising its Scoping Study last year, MOD Resources has today published two distinguishable cases in its updated PFS:
- Base Case: based on a Proved and Probable Ore Reserve
- Expansion Case: based on a Production Target utilising the Base Case Ore Reserve and additional production from existing Inferred, Measured and Indicated Mineral Resources from Year 4.
Today’s PFS suggests that MOD’s T3 deposit is a robust, long life copper mine, with a technically strong and financially viable project generating over US$530 million in free cash flow over an initial 8.8 year processing life with an initial development capital cost is US$155 million.
PFS in more detail
The PFS Base Case with plant throughput of 2.5Mtpa indicates a technically sound and financially robust project generating close to US$730 million (A$960 million) in EBITDA over 9 years.
According to MOD, it is proceeding with “upgrading its Resource in response to expansion of its T3 Mineral Resource estimate and the strength in the copper price since the Scoping Study was announced.”
Other notable highlights from today’s announcement include a pre-tax NPV of US$281 million (A$370 million) assuming a coper price of US$3.00/lb, net cashflow of US$530 million (A$697 million) and payback period of 2.7 years.
MOD is also targeting an all-in sustaining unit cost of US$1.36/lb and hopes to add further economic viability to its T3 deposit by upgrading its plant to treat 4 million tonnes each year, compared to the 2.5 million first assumed by the PFS base case.
Drilling is ongoing to upgrade existing Inferred Mineral Resources to Measured and Indicated Mineral Resources with a revised resource estimate expected in Q2 2018.
If MOD’s plans are actualised and the its Expansion Case proceeds, the PFS indicates MOD could generate more than US$1.1 billion (A$1.45 billion) EBITDA over 12 years. If the expansion proceeds, MOD is likely to have to pay around US$37 million to conduct the necessary plant upgrades; but could potentially raise its NPV to US$402 million and annual net cashflow to US$840 million at T3 in Botswana (starting in Year 4).
MOD Resources’ Managing Director, Mr Julian Hanna, said the PFS clearly demonstrated the project’s strong technical foundation and exceptional financial returns as well as the opportunity for significant upside assuming the Expansion Case proceeds.
“This is our starting mine – and while it is an exciting milestone, we believe there is more to come with potential for satellite deposits around T3 and numerous other exploration targets to be tested along a 140km corridor,” said Mr Hanna. “None of this potential upside has been included in the scope of the PFS.”
“We are extremely lucky to be operating in such a favourable mining jurisdiction and look forward to transforming into a profitable long-life copper producer in Botswana,” said Hanna.