New World Resources’ Antler copper mine has emerged as one of the copper developments best positioned to capitalise on an expected boom in demand for the red metal from electrification, with an updated scoping study mapping out a bigger and more robust project.

New World (ASX:NWC) has run the numbers again after an already impressive 2022 scoping study, leveraging a 48% increase in its resource base to boost the scale and scope of the proposed American copper mine.

Now hosting 11.4Mt at a copper equivalent grade of 4.1% Cu, one of the highest in the global development pipeline, the new study suggests Antler will run at an operating rate of 1.3Mtpa over 13 years, a 30% increase on the 10-year mine life previously announced, with a 41% increase in total copper production to 381,400t on a copper-equivalent basis.

Annually the mine would deliver 32,700t of CuEq production over its first decade, 7% higher than previously planned, including 16,400t of copper metal a year.

That would generate US$3b in revenue ($4.3b), 50% or US$1b above prior forecasts, 58% more free cash flow at US$1.5b ($2.15b), with a 59% rise in pre-tax NPV(7) to US$835m ($1.25b), IRR of 40.2% and only a 25% rise in capex to US$252m.

At the same time the Arizona-based mine would be one of the cheapest in the copper world thanks to its bevy of by-product credits from its polymetallic mix of zinc, lead, silver and gold, with negative C1 cash costs of -US$0.50/lb and all in sustaining costs of US$1.77/lb CuEq.

 

A significant step forward

The study update will give NWC a new world of confidence heading into its PFS release, targeted for the fourth quarter of 2023.

That should come hot on the heels of mine permit applications, due to be submitted by the company in the third quarter.

“The updated 2023 Scoping Study marks another significant step forward in our strategy to develop a long-life, high grade copper operation based on the Antler Copper Deposit – demonstrating that we have an even more robust opportunity than we were considering last year,” NWC managing director Mike Haynes said.

“The very high-grade of the mineralisation at Antler allows us to develop a mine for relatively modest CAPEX. And in line with this – the sizeable 11.4Mt resource we have delineated following the very successful exploration drilling completed throughout 2022 has the potential to generate more than A$2 billion of free cash over the initial operating period – 57% more free cash than we had been considering previously.

“Antler now stacks up as one of the most financially robust copper development opportunities in the world at a time when global copper supplies are rapidly declining and global demand is forecast to continue to be very strong.

“Given Antler’s strong ESG credentials and minimal environmental footprint we expect relatively short permitting and construction lead times.

“Being a very low-cost near-term producer puts us in a great position to capitalise on the increased demand for copper in the near future.”

That point is hammered home by the prices used in the study. Silver and gold prices of US$20/oz and US$1800/oz are already conservative by current measures.

Copper, zinc and lead parameters of US$8500/t, US$2800/t and US$2000/t are all around spot prices.

As the market deficit for copper and other battery metals really begins to bulge in the latter part of this decade, electric vehicle penetration grows and supply struggles to keep up, expect those price points to be increasingly stretched.

 

Big boost from other metals

While many of the copper projects pitched to be developed for the next phase of the commodity supercycle are large, they carry huge capex bills that could pose significant funding roadblocks and development risks.

The desire to snap up copper tonnes with low execution risks has already been seen in BHP’s $9.6 billion takeover of OZ Minerals and Rio Tinto’s buyout acquisition of minority shareholders in the Oyu Tolgoi mine.

But at some point new developments will have to be sanctioned and delivered.

New World’s high grades, polymetallic resource and low capex makes it a standout project for the coming copper boom.

Located just 15km from rail and highway infrastructure at Yucca, and with mains power to within 700m of the deposit, Antler is well located.

Its resource base includes 78% of material for the first three years of production in the high confidence indicated category, with 82% indicated for the first five years of mining.

Meanwhile, an increase in gold production to 57,400oz of gold and 7.7Moz of silver will increase precious metals revenue to US$258m over the life of mine, adding value to the 190,300t of copper metal, plus zinc and lead, Antler will deliver.

The majority of the capital to be allocated to the expanded capex estimate of US$252m will be used to increase the scale of Antler’s processing plant to 1.5Mtpa, which will be deliberately designed to enable staged expansions as exploration success is realised.

 

 

 

This article was developed in collaboration with New World Resources, 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.

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