708 Capital thinks Alma’s Briggs copper JV is a potential low-cost development

708 Capital believes that Alma Metals’ Briggs copper JV project compares favourably with other porphyry projects globally
Current resource of 415Mt at 0.25% copper and 31ppm molybdenum is just the start with drilling expected to deliver more metal at higher grades
Projects with similar grades have been successfully developed or have been assessed to be financially and technically viable

Special Report: Wealth management firm 708 Capital believes that Alma Metals’ Briggs copper joint venture in central Queensland has all the right ingredients to be a world class asset with similarities to successful global operations.

The Briggs porphyry copper deposit is just 60km from the deep-water port of Gladstone and has an inferred resource of 415Mt grading 0.25% copper and 331 parts per million molybdenum.

While this is significant, 708 Capital believes it is just the start that Alma Metals (ASX:ALM) will build on with more drilling, pointing to the current exploration target of 480-880Mt with a grade range of 0.2-0.3% copper.

That includes the current 2000m infill drilling program that is aimed at increasing resource confidence to the indicated category – a status which provides enough certainty for preliminary mine planning – and will also collect samples for metallurgical testing. If successful, the current drilling campaign will support the initiation of a scoping study later this year.

Initial results have already been encouraging to say the least with the first hole intersecting a deposit best result of 276m at 0.45% copper and 24ppm molybdenum from surface including 49m at 1.01% copper and 17ppm molybdenum from 3m.

The wealth management firm also noted that although the current resource grade may give some potential investors pause, their review of recent development studies on benchmark projects shows that similar deposits can be both technically and financially viable at today’s metal prices.

These include Teck’s Highland Valley and Taseko Mines’ Gibraltar mines, which are long-life operations that also happen to be the two largest copper operations in British Columbia, though they do benefit from the abundance of cheap, largely hydro-electric power.

708 Capital has pointed to Xanadu Mines’ (ASX:XAM) Kharmagtai project in Mongolia and the open pit sulphide portion of Hot Chili’s (ASX:HCH) Costa Fuego project in Chile, noting that they are porphyry projects which are broadly similar to Briggs.

Its work indicated that the open pit sulphide development at Costa Fuego could generate revenues of $39.80 per tonne milled, delivering margins of $15.35/t milled while Kharmagtai’s revenues and margins run at $25.46/t and $10.87/t respectively.

While these are not indicative of Briggs’ future economics, they do provide confidence that lower grade porphyry projects can still deliver robust returns.

A potential low-cost development

708 Capital believes that Briggs has several features that could potentially support a robust, low-cost operation like several successful global operations with similar grades.

These features include:

Outcropping, continuous mineralisation, with a potentially low strip ratio and no need for a pre-strip
Large tonnage, which allows for high throughput and economies of scale
Proximity to existing infrastructure, including both baseload and planned low-cost solar power, water, transport, port, and services
Excellent preliminary metallurgical recoveries of up to 95.1% to a potentially marketable concentrate from initial bench scale work; and
Near surface zones of higher-grade mineralisation for a potential high-grade starter pit, which provides options for a phased development.

It certainly doesn’t hurt that Queensland ranks 13^th globally in the 2023 Fraser Institute Survey for mining jurisdictions.

Briggs JV project

The Briggs JV project consists of six exploration permits covering 332km².

ALM first started activities in 2021 after entering into an option and phased farm-in and JV agreement with Canterbury Resources (ASX:CBY).

This allows the company to earn up to 70% in the JV through the expenditure of $15.25m in three stages over nine years.

To date, ALM has completed the Stage 1 farm-in, which gives it a 30% interest in the project, and expects to meet the obligations for Stage 2 – increasing ownership to 51% – once the current drill program is complete.

The Stage 3 farm-in will give the company the full 70% ownership by spending $9m by June 30, 2030.

Rio Tinto (ASX:RIO), which previously held the Briggs and Mannersley EPMs, retains a 1.5% net smelter royalty over those two tenements, and a one-off cash fee payable of A$0.50 per tonne of copper equivalent metal in declared mining reserves at a decision to mine.

The NSR can be reduced to 1% by making a cash payment to RTX equal to the fair market value of a 0.5% NSR at the time of settlement.

Exploration of Briggs remains at a relatively early stage with ALM having undertaken a 12-hole RC drill program, detailed soil sampling, metallurgical scoping, a four-hole diamond drill program in late 2022, an updated resource, and a further nine-hole diamond program in late 2023 since its entry.

Briggs deposit drill programs and resources on copper-in-soils. Pic: Alma Metals

Experienced leadership

708 Capital adds that ALM’s board and management have significant relevant experience with success in previous ventures. They also have significant shareholdings, which align their interests with other shareholders.

Executive chairman Alasdair Cooke has over 30 years’ experience in the resource exploration and mining industry throughout Australia and internationally.

He spent his early career with BHP and the last 20 years managing public resource companies as part of the Mitchell River Group, which has been responsible for several successful mining operations and resource companies such as Exco Resources, Panoramic Resources and Mirabela Nickel.

Managing director Frazer Tabeart is a geologist with over 30 years’ experience in the international resources sector, encompassing exploration and corporate roles related to copper, gold, uranium, nickel and coal across five continents.

Prior to joining the company, he spent 16 years as a principal geologist at Western Mining Corporation.

Non-executive director Valentine Chitalu has had a 30-year career in private equity, privatisation, merchant banking, corporate finance, accounting, auditing, development economics, capital markets and in business and private sector development in transitional economies, while John Dean has served with mining operations and development projects in Zambia, Mauritania, Botswana, Argentina, and Panama for First Quantum Minerals Limited.

The final non-executive director is Ian Hulme, who has several decades of experience in the fields of managed fund investments, capital raising and project development.

He is a founding partner of independent private equity investment firm Sentient Group, which now has investments and commitments in the resources sector totalling US$2.5bn.

This article was developed in collaboration with Alma 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.