UPDATE:  MOD Resources has requested a trading halt pending an announcement “regarding a capital raising” and to respond to the Sandfire Resources speculation.

Copper producer Sandfire Resources has confirmed media speculation that it approached junior MOD Resources “exploring a potential combination of the two companies”.

Cashed-up mid-tier miner Sandfire had contacted MOD (ASX:MOD) with a takeover offer which was far greater than the explorer’s current $55m market cap, according to the Financial Review.

MOD shares are temporarily paused pending an announcement of their own.

The MOD resources share price — which has been hammered over the past year — was fetching just 22c pre-open Monday.

Now with full ownership of the T3 copper-silver deposit and processing plant in Botswana, MOD believes it has laid the foundations to grow into a mid-tier copper producer.

A ‘base case’ T3 pre-feasibility study released January 2018 estimated annual free cash flow of $101m pre-tax, producing 23,000 tonnes of copper and 690,000 ounces of silver each year over an initial 8.8-year mine life.

The MOD share price over the past year.
The MOD share price over the past year.

Miners usually undertake up to four different types of studies to determine whether or not a resource can be mined economically.

These are – in order of importance — scoping, preliminary feasibility (PFS), definitive feasibility (DFS) and bankable feasibility (BFS).

A definitive feasibility on developing the $US155m T3 project is due in March.