Rex Minerals burned a lot of investors with its 98.5 per cent share price fall from $3.05 in 2011 to 4c this time last year.

But over the past few months there have been signs of life returning to Rex and its world-class Hillside copper project in South Australia – and there could be a lot more to come.

Admittedly a rise from that 4c low to recent trades at 7.5c is unlikely to impress anyone who bought the stock at its peak when Hillside was being compared with BHP’s giant Olympic Dam mine.

That geological comparison was possible because Rex’s copper is in the Pine Point Copper Belt which runs along the eastern side of the Eyre Peninsula and appears to have a similar same genesis as Olympic Dam with a rock composition known as IOCG (iron oxide copper gold).

Unfortunately for Rex it ran headfirst into a major copper price (and iron ore) correction, environmental opposition, and a go-slow South Australian government that worried about the size of the proposed mine which had been designed to produce three minerals: copper, gold and iron ore.

It was the Hillside iron ore — a low-grade magnetite material that required processing before it could be exported — which was the first hurdle for Rex to clear; which it did by abandoning iron ore, consigning any production of that material to waste dumps, or for use as fill at the end of the mining process.

Rex Minerals has lost 98 per cent of its value since 2011. Source
Rex Minerals has lost 98.5 per cent of its value since 2011. Source

Redesigning Hillside has also required the preparation of a new Program of Environmental Protection and Rehabilitation (PEPR). Adding insult to injury, the clock on previous approvals started to run out which meant a request for a government time extension in lodging that document.

February 26 is now the deadline for getting the new PEPR to the SA Government. If hints circulating in the mining industry are correct the process might be completed sooner than that.

In theory, approval of the new PEPR should clear the way for Rex to be able to push ahead with financing talks leading to a start on construction at Hillside sometime around the middle of next year — a date for investors to pop into their diaries because that’s when Rex might enjoy significant share-price re-rating.

But, before considering the potential good news there is another comparison worth making between Hillside and Olympic Dam, a project which BHP once earmarked for a whopping $US20 billion expansion that would have seen it dig the world’s biggest hole.

A tortuous approvals process in SA added years to the plan.

While companies are loath to speak ill of regulators there is little doubt the government process delayed the “big dig” at Olympic Dam to the point where BHP went cold thanks to the copper price falling and the mine’s secondary mineral, uranium, crashing.

Rather than get a massive mining development which would have dramatically improved the SA economy the State got nothing — and is still paying the price.

Management at Rex, naturally, declines to say a bad word about the SA Government, but shareholders and outside observers are unimpressed.

New Hillside project emerging 

History aside, a new and smaller Hillside project is emerging, one that will be minus the iron ore element.

The plan now is to develop a mine able to produce a significant amount of copper and gold, perhaps as much as the 2011 plan which aimed for 55,000 tonnes of copper equivalent (copper, gold and magnetite) a year for the first six years, and then up to an expanded target of 100,000 tonnes of copper equivalent.

That original plan assumed a copper price of $US3.20 a pound, gold at $US1200 an ounce and magnetite at $US120 a tonne, a hopelessly high best guess for iron ore but remarkably accurate for copper and gold.

The magnetite today is worthless, but copper has recovered to $US3.07/lb and gold is $US1270/oz.

What happens next will be interesting and very much in the SA Government’s court. It could repeat the Olympic Dam farce which would refresh earlier signals that the State might claim to be mining friendly, until asked to approve a mine.

Or it could consider what an important project Hillside could be, located close to all essential infrastructure including a port at Ardrossan, grid power, roads, rail and a skilled local workforce.

Capping off the appeal of the mine is that once developed it could become the starter project that unlocks more of the copper (and gold) that lies along the Pine Point Copper Belt in a region of Australia that has a long history of copper production.

Back in 2011, before the wheels fell off Rex, it had outlined a series of targets running parallel to the coast, each with the theoretical potential to be as significant as Hillside, and project.

The clock on the resurrection of Hillside has started, making Rex a stock to watch.