QMines study confirms viable future for Mt Chalmers copper-gold deposit

A pre-feasibility study (PFS) for the development of the historic Mt Chalmers copper-gold deposit in Queensland has demonstrated a technically and financially robust opportunity for owner QMines (ASX: QML).

The study assessed the construction of a $191 million operation comprising a three-stage open-pit mine to a total depth of 220 meters and a standalone on-site processing plant with a capacity of 1 million tonnes per annum.

The proposed mine will be supported by a maiden ore reserve of 9.5Mt (proved and probable) and an inferred resource of 837,011t over an initial mine life of 10.4 years.

Metal produced during the first decade will include 65,000t of copper, 160,000 ounces of gold, 30,600t of zinc, 1.8Moz of silver and 583,000t of pyrite.

Financial metrics

Mt Chalmers is expected to generate $1.64 billion in revenue, while life-of-mine free cash flow will sit around $636m.

The pre-tax net present value of the project has been estimated at $373.4m with a 54% internal rate of return and is believed to demonstrate the cost benefits of shallow open-pit mining.

The incorporation of additional known deposits at Sulphide City and Scorpion (both within the Develin Creek copper-zinc project) and Woods Shaft, located 800m from Mt Chalmers, provides QMines with significant upside potential and immediate expansion opportunities.

Viable opportunity

QMines executive chair Andrew Sparke said the PFS concluded that Mt Chalmers was a technically achievable and commercially viable opportunity.

“The completion of this study represents a significant milestone for QMines and our shareholders as we continue to demonstrate Mt Chalmers as a project with scale and potential for development,” he said.

“It will allow us to establish a mining and processing business in the critical metals sector with an attractive risk-return profile and clear potential to further enhance project returns through the expansion of production rates and extensions to the project life.”

High-grade project

Discovered in 1860, the high-grade Mt Chalmers project is located approximately 17km northeast of Rockhampton in Queensland.

It comprises a polymetallic volcanic-hosted massive sulfide mineral deposit with recoverable copper, gold, silver, zinc and sulphur.

Total historical production by 1982 was 1.2Mt at 3.6 grams per tonne gold, 2% copper, and 19g/t silver.

Last year, QMines commissioned Como Engineers to deliver the PFS for Mt Chalmers.