New World Resources identifies US$2b in potential revenue from Antler copper project
New World Resources has begun a pre-feasibility study for Antler, which is due for completion in the March quarter of next year.
A scoping study for New World Resources’ (ASX: NWC) Arizona-based Antler copper project in the United States has identified potential revenue of US$2 billion (A$2.8 billion) over an initial 10-year mine life.
The study was underpinned by a resource published in November last year of 7.7 million tonnes at 2.2% copper, 5.3% zinc, 0.9% lead, 28.8 grams per tonne silver and 0.18g/t gold.
Drilling has continued since the resource was declared which New World says could have a “positive impact” on the project’s economics.
To develop the project through to first production, capital expenditure has been estimated at US$201 million (A$293 million) and this includes a U$36.5 million (A$53.29 million) contingency.
This would create a 10-year operation with a throughput rate of 1Mt a year once steady state production has been achieved in the second year.
It is expected the operation would produce about 30,600tpa of copper-equivalent concentrates (about 15,350tpa copper in-concentrate).
Over the 10-year mine life, revenue of US$2 billion is forecast to bring in pre-tax free cash flow of around US$952 million (A$1.36 billion).
This equates to about US$135 million (A$193 million) a year between years two and nine of the operation.
Low-cost copper operation
The study assumes C1 copper-equivalent cash costs of US$1.66 per pound over the mine life.
Commenting on the study New World managing director and chief executive officer Mike Haynes said the study indicates Antler could be a “low-impact, high-margin operation, for a modest capital outlay”.
“This contemplates annual production of approximately 30,000t of copper-equivalent metal in-concentrates.”
“The forecast production includes approximately 15,000t of copper in-concentrate, which because of the substantial value of the co-products, could have a negative C1 cost for copper production.”
He said if this was achieved, Antler could be one of the lowest cost copper producers in the world.
Upside remains
Mr Haynes noted further upside remains for the operation if the company continues to expand the resource, which remains open at depth and to the south.
“We expect that we will be able to either extend the project life and/or the production profile, which should improve the project’s economics.”
At current spot commodity prices, Antler has a net present value of US$539.9 million (A$771 million) and a pre-tax internal rate of return of 42.7%.
Payback on the capital expenditure after the pre-production period is expected to occur within 29 months.
Pre-feasibility study underway
Following the positive scoping study results, New World has already begun a pre-feasibility study for the project to enhance the development parameters and economics.
This will include an updated resources “in the coming months” once New World has received all assays from recent deeper drilling.
The pre-feasibility study is scheduled to be completed in the first quarter of next year and will immediately be followed by a definitive feasibility study.
In parallel with the pre-feasibility study, New World is defining environmental and social impacts for the operation so it can submit applications for mining permits in the December quarter of this year.
“With Arizona being one of the most favourable mining jurisdictions in the world, we are going to continue to push to get Antler back into production as quickly as practicable,” Mr Haynes said.