According to Goldman Sachs, copper production will need to grow 8Mt by 2032 to satisfy demand, with rising green requirements for the metal due to the advance of electric vehicles and renewable energy.

By 2050, total demand for copper will double from around 25Mt today to ~50Mt according to S & P Global – yet at the same time, copper supply is hitting major roadblocks.

New project sanctions since 2007 have fallen from 203 in the five years to 2012 to just 67 in the three years between 2018 and 2021.

While copper prices have been on the rise, tallying a healthy US$8700/t this week, the overall size and grade of the sanctioned projects have been tumbling too.

It seems we’re crying out for a hero. In that context, under the radar $25 million capped copper developer Anax Metals (ASX:ANX) is emerging as a major beneficiary of the bearish outlook for copper supply and bullish future for copper demand.

Pending the outcome of a definitive feasibility study – due this month, as in within days – and permitting, it could be constructing its ready to go Whim Creek mine in the Pilbara later this year.

“It makes it significant, because not only are new discoveries getting fewer and further between, but the time from discovery through to development is now typically 10-15 years,” Anax managing director Geoff Laing told Stockhead.

“On the more complex, larger projects it’s more like 20 years.

“That’s an incredibly long period of time between finding something and turning it into something that is useful to us.

“We feel like we are in rarefied air, being a near term copper producer.”

 

Anax Metals
Whim Creek was previously mined for its shallow oxide resources but could be redeveloped as a larger VMS hub. Pic: Supplied (ANX)

A mine with a difference

Whim Creek, 80% owned by Anax and 20% held by JV partner Develop Global (ASX:DVP) is a project with a difference.

Purchased from Venturex, later rebadged Develop, in an earn-in for expenditure commitments and a total of $3.m in instalments over three years, the high grade VMS mine was previously in production under Straits Resources in from 2003-2009, producing 67,000t of copper cathode.

Containing high grade copper and zinc, with lead, silver and gold by-products, Whim Creek stands out in an environment where grade decline is becoming a massive problem for established producers.

“It’s a polymetallic resource, mainly copper, but copper, zinc, lead, silver, and gold,” Laing noted.

“And when you look at the basket of elements that we’ve got, our resource base is running north of 2% copper equivalent.

“When you think the global average (grade) of copper being processed now is below 0.6% we start off at a great place in terms of grade and of course grade is always king.

“And then being in the Pilbara, we’re in probably one of the most advanced mining jurisdictions in Australia and globally.

“We are in a space where developing a mine is quite doable, we’ve got massive mines around us, all the infrastructure and that makes our life easier in advancing this development more rapidly.”

 

Whetting the appetite

A DFS is literally around the corner, but a scoping study updated last year has already identified an attractive production pathway for the Whim Creek mine, located 115km from Port Hedland on WA’s North-West Highway.

Consisting of open pits at Whim Creek and Mons Cupri, with potential undergrounds at the satellite Evelyn and Salt Creek deposits, the refired Whim Creek concentrator would produce 39,000t of copper, 70,000t of zinc, 18,000t of lead, 1.8Moz of silver and 14,300oz of gold generating free cash flow of $291m at a projected capex of $55m and with an IRR of 83%.

Those numbers will all be updated in the new DFS.

But the project has already attracted the interest of global majors, with one of the world’s biggest miners and commodity traders, Anglo American signing up in 2021 for a 1% net smelter return on an investment of US$2 million and proposed US$20m funding package to offtake production from Whim Creek.

“Where we started this discussion, in terms of the scarcity of near-term copper production, is really what’s driven the strong interest from Anglo,” Laing said.“Even though the scale of our project is pretty modest in Anglo terms, there is just so little out there in terms of near term copper production that they started watching us from soon after we acquired the project.

 

Anax Metals ASX ANX
Whim Creek boasts over 10 million tonnes of polymetallic, copper rich ore. Pic: Supplied (ANX)

 

Technology focused

The other major differentiator for Anax is its technology focus.

The copper hopeful has worked with consultants at Nexus Bonum to build particle ore sorting technology into the production process for Whim Creek.

That technology will improve the feed grade and economic potential of the Whim Creek deposits, but also exclude more waste from the processing step.

That will provide ESG benefits as well, with lower energy, water and tailings storage requirements.

“We are unashamedly technology focused. I’m an engineer by training and I have focused on technologies that I believe are robust, that will enable projects such as Whim Creek to be brought back into production, and essentially be highly leveraged,” Laing said.

“The main technology suite that we’re focusing around is particle ore sorting. And the important part of that is we’re doing something different.

“I’ve been looking at this technology for about seven years, so we know that these VMS deposits are highly amenable to upgrading, because they’re very variable in nature the way the resources form, which is ideal for this particle ore sorting technology to upgrade the material.

“And that’s really exciting, every other facet of life revolves around technology advancement, and the mining industry is not good at the uptake of technology.

“And that creates opportunities for those that are prepared to go down that path. We are technology focused, that is fundamental to our strategy.”

It could help Anax in its longer term aims to develop Whim Creek into a central processing hub for stranded VMS deposits across the Pilbara.

“So when the DFS comes out, what you’re going to see is a very robust project at Whim Creek,” Laing said.

“But when you look further afield within the Pilbara, we’re in a VMS province (and) there’s probably 10 other deposits around us within about 150km that are also VMS deposits that will be amenable to the technology.

“Any or all of those deposits could potentially be treated through the processing hub that we plan to develop at Whim Creek. The key point to make in all of that is these VMS deposits often don’t grow to the scale that would justify building all of the infrastructure, the processing, the logistics for the deposit itself.

“But they’re high grade, they can be upgraded. And so they’re absolutely ideal to fit into this satellite processing hub type model, which is exactly what we’ve talked about in the presentation.

“We feel that with first mover status, we’ll deliver very strong cash flows from our own project. Once we start bolting on potential feedstock from other projects, that takes us to the next level and certainly we’re moving towards that as a business development plan.”

 

Anax ASX ANX
Chemical engineer and managing director Geoff Laing says Anax is taking a technology-driven approach to developing Whim Creek. Pic: Supplied (ANX)  

Existing infrastructure

With more than 10Mt of copper ore in resource, the company will begin by expanding the Whim Creek and Mons Cupri open pits into sulphide resources not previously mined by Straits, which focused on shallow oxide tonnes.

Underground developments at Evelyn and Salt Creek could be developed later in the mine’s life.

The brownfields nature of the Whim Creek project is another factor that should increase the speed at which Anax can bring the mine into production.

It stands apart from greenfields developers with massive capex requirements, complex funding models and long lead times to first cash flow.

“There’s substantial infrastructure on site, Straits Resources pulled up stumps in late 2009-2010, and sold the asset to Venturex,” Laing said.

“They left behind a crushing plant, all the offices, all the workshops, there’s a small solvent extraction and electrowinning plant (SWEW).

“Since acquiring the project two years ago, we have completely refurbished all of the pond infrastructure that sits around the heap leach.

“So we’ve got all the utilities, infrastructure, the power, the water, the roads, bore fields, all of the pond infrastructure, that’s all there.

“That makes a big difference from a capital development perspective and also in terms of the time taken to get into production.”

Whim Creek is also well known for its local pub, the Whim Creek Hotel. Shuttered around six years ago, Anax is working with the Ngarluma Aboriginal Corporation, the hotel’s owner and operator, to refurbish and reopen the pub.

With an existing mine camp it will provide accommodation to Whim Creek workers, while Anax will provide Ngarluma with a steady source of income to underpin the first nations owned business.

Laing says it reflects the strong relationship the company has formed with traditional owners.

He sees Anax receiving key permitting approvals to restart the mine over the next quarter.

“The permitting is the critical path, we’re a long way down the track with that and we’re hopeful we’ll get it done through the next quarter,” he said.

“Then the debt funding hopefully drops into place at the same time. And then, we get into the project development proper in the second half of the year.

“And that should see us potentially the next or one of very few new copper producers in Australia, potentially by the end of next year. So that’s an exciting path ahead for us.”

 

 

 

This article was developed in collaboration with Anax 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.

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