Anax Metals’ Whim Creek project muscles up as copper prices surge

Rising copper prices have increased economics of Anax Metal’s Whim Creek project by 32%
Project now estimated to generate $520m in free cash flow along with pre-tax NPV of $357m and IRR of 74%
Studies have started on regional processing hub strategy and discussions are continuing with potential offtakers and financiers

Special Report: Strengthening copper prices have supercharged the economics of Anax Metals’ Whim Creek copper project by 32%, increasing pre-tax NPV to $357m and IRR to 74%.

Whim Creek is just 115km from Port Hedland and will process sulphide ore from the Mons Cupri, Whim Creek, Evelyn and Salt Creek deposits through a new 400,000tpa concentrator.

Under a definitive feasibility study released in April 2023, the project was envisioned by Anax Metals (ASX:ANX) as a base metals operation with a production life of 8.5 years and very modest $71m pre-production capex at that time.

This will in turn generate free cash flow of $340m with a NPV and IRR – both measures of profitability – of $224m and 54.3% respectively through the production of 55,000 tonnes per annum of copper, zinc and lead concentrates (~12,000t copper equivalent).

From the second year of operation, the company will use the fully permitted existing heap leach facility to produce copper cathode and zinc sulphate from mined low-grade ore.

ANX has also started studies for a 20,000tpa copper equivalent production hub at Whim Creek that will offer its neighbours a potential processing solution.

This production will be split equally between the concentrator and the heap leach facility.

The first stage of this is a scoping study with 20% JV partner Develop Global (ASX:DVP) into the feasibility of transporting oxide ores from DVP’s 100%-owned Sulphur Springs deposit to Whim Creek for heap leaching into saleable copper and zinc products.

Strong copper delivering improved economics

With copper prices rising some 17% to date this year, ANX now expects Whim Creek to generate $520m in free cash flow, delivering pre-tax NPV and IRR of $357m and 74% respectively.

Along with increases in other commodity prices, the company also outlined the potential to increase open pit mine life and cashflow through further re-optimisation work.

It will also prioritise Evelyn and Salt Creek copper resource extension exploration in the coming field season and has started studies for the regional processing hub strategy.

Additionally, leaching test work for Sulphur Springs oxide/transitional leaching has been completed while discussions are continuing with several commodity traders and funds interested in securing offtake and providing financing for the project.

Over the last few weeks, ANX has also s engaged with a number of new parties interested in securing Australian copper.

“The Whim Creek asset continues to shape up as a strategic processing hub for the Pilbara. The robust standalone project delivers attractive economic outcomes which are highly leveraged to base metal prices,” managing director Geoff Laing said.

“The recent increase in copper and other key metal prices has significantly enhanced project financial metrics.

“Anax is ideally positioned to benefit from the positive momentum building in copper demand on the back of its critical role in electrification and green technologies.

“The team has worked diligently to ensure the Whim Creek asset is ready for near term production of key energy metals while establishing a platform for growth through the processing hub and resource extensions.”

This article was developed in collaboration with Anax Metals, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.