Four local mine developers set to benefit from record copper prices
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After reaching a record high in US$10,720 a tonne in May, the copper price is expected to average out US$8,840 a tonne in 2021 and settle around US$7,890 a tonne in 2023 – according to the June edition of Resources and Energy Quarterly from the Department of Industry, Science, Energy and Resources.
This is up an average 9% a year on 2020 levels, with the copper price expected to reflect economic recovery and its expanded use in low-emissions tech, like electric vehicles.
Total world consumption is forecast to reach 27 million tonnes in 2023 – up an average 3% a year – with China’s consumption alone accounting for 16 million tonnes.
Australia’s copper export volumes are expected to reach around 909,000 tonnes in 2022–23 and our copper export earnings are expected to increase in-line with higher prices, potentially reaching $13 billion in 2021–22.
The report mentions several copper development projects underway which could contribute to potential capacity increases towards the end of 2023 – and take advantage of the price outlook and expected consumption growth.
The company is focused on development pathways for its flagship Copper Hill Project in NSW.
Copper Hill is around 50kms north of Cadia — one of Australia’s largest producing copper mines (843,338 ounces gold and 96,042 tonnes copper in FY20) — and hosts a high-grade zone of 160,000 tonnes copper and 480,000 ounces gold in a JORC Resource of 28 million tonnes grading 0.56% copper and 0.53% gold.
In 2017, Copper Hill was independently valued at $14.4 million within a range of $7.6-$26.6 million depending on metal prices – and copper has increased around 45% (and gold around 35%) since then.
The plan is to progress towards the PFS in the near-term and assess any scope for satellite deposits.
Market Cap: $241.27 million
KGL’s poster child is the 426,200 tonne (and growing) Jervois copper project in Northern Territory, where the plan is to produce 30,000 tonnes of copper per year, plus silver and gold.
A final feasibility study is now underway, along with drilling to extend mine life to a minimum 10 years.
The company has also begun project financing ($200 million) and product sales discussions and has secured approval for its mining management plan from the NT government.
Market Cap: $71.87 million
The company’s Kalkaroo Project hosts resources of 1.1 million tonnes of copper, 3.1 million ounces of gold and 232,000 tonnes of cobalt.
The PFS (released 2 years ago) showed an estimated pre-tax NPV of $564 million which was highly sensitive to copper and gold metal prices – and this has now been revised to $1.163 billion using long term price forecasts for copper and gold.
Discussions are ongoing with potential mining contractors and project financiers, but the company is aiming to start mining a low-cost open pit gold mine from 2022 before moving into the main copper orebody.
Market Cap: $139.88 million
The company acquired the Nifty copper mine in WA (which hosts mineral resources of 658,000 tonnes container copper) after it was placed on care and maintenance in 2019.
Under its new ownership, the processing method is expected to change to heap leaching, to produce copper metal plate.
Under this model, annual capacity is 20,000 tonnes and Cyprium is targeting first production at the end of 2022.