TIDMPXC
RNS Number : 4436H
Phoenix Copper Limited
01 August 2019
Phoenix Copper Limited / Ticker: AIM:PXC / Sector: Mining
1 August 2019
Phoenix Copper Limited ("Phoenix" or the "Company")
Completion of new Empire Mine Economic Model
Phoenix Copper Ltd (AIM: PXC; OTCQX: PGMLF), the North
American-focused base and precious metals exploration and
development company, is pleased to announce that it has completed a
new economic model for the Empire Mine open pit heap leach SX-EW
project in Idaho, USA.
Highlights:
- Average annual production of 7,665 tons copper equivalent
(7,000 tons copper and 1,600 tons zinc) over the life of the mine
(with initial production of 8,600 tons per annum)
- 11-year mine life, including processing of lower grade
stockpile, leaching 1.6 million tons per annum
- Initial head grade of 0.60% copper
- Initial capital cost of $51 million
- Life of mine copper equivalent cash cost of $1.72/lb ($1.33/lb in early years)
- Life of mine EBITDA of $202 million and profit after tax of $177 million at $3.25/lb copper
- 7% NPV of $55.5 million post-tax and IRR of 33% at $3.25/lb copper
- 7% NPV of $25.5 million post-tax and IRR of 20% at $2.75/lb copper
Background
This new economic model, which has been prepared with Hard Rock
Consulting LLC of Lakewood, Colorado, has been derived following
the publication in May 2019 of an updated NI 43-101 compliant
resource, which incorporated the 8,600-metre 2018 Empire drilling
programme results. The new economic model uses current market data
and will form the basis of the feasibility study currently underway
and scheduled for completion in Q2 2020.
Further mine planning and optimization has resulted in an
economic model based on ore production of 1.6 million tons per
annum over an initial 9-year mine life, with an additional 2 years
of low-grade ore processing at the end of mining. This model does
not take into account recovery of gold and silver, but does now
include zinc recovery.
The Company has used the pit production schedule prepared by
Hard Rock Consulting, and production, capital and operating cost
estimates prepared by Phoenix staff in conjunction with Hard Rock
Consulting.
The model is summarised below and can also be found on the
Company's website at www.phoenixcopperlimited.com.
Dennis Thomas, CEO of Phoenix, commented:
"I am pleased to report that, following our drilling campaigns
in 2017 and 2018, Hard Rock Consulting completed an update of the
resource calculation. Based on these new resources, mine planning
and scheduling was completed by Hard Rock Consulting. This economic
model is is developed from these new resources and production
schedule.
"The production schedule uses two copper cut-off grades to
ensure higher grade ore is fed to the heap leach pad first. An
increase in the initial pad grade has allowed the mine production
rate to be reduced from 2.25 million tons a year in the April 2018
economic model to 1.6 million tons, resulting in a reduction in the
pre-production capital cost from $68 million to $51 million. We
believe the copper price will improve in the medium term which is
the largest sensitivity in this project, given that with each $0.25
increase in the copper price, a further $15 million of value is
added to the project.
"Based on this model we are continuing with the Feasibility
Study, scheduled for completion in Q2 2020, and look forward to
commencement of mine production of copper and zinc in late 2021. In
due course, we will look to expand and extend the project. We will
also continue to evaluate the wider Empire district which now
comprises a total of 23 square kilometres of mineralised claims
staked along a 5.4-kilometre strike length from the Empire oxides,
as well as the Navarre Creek precious metals zone,
"We view this initial open pit project at Empire very much as a
"starter mine" in a significant mineralised area that also contains
the high grade Red Star discovery, the deeper underground sulphide
orebody at Empire and three other historic producing mines.".
Empire Mine Cash Flow Summary
PRODUCTION
------------------------------------------ ----------------- ------------------------------
0.325% Cu cut-off tons 12,794,000
% copper 0.60
% zinc 0.21
0.20 % to 0.325% Cu cut-off tons 5,181,000
% copper 0.27
% zinc 0.14
Total ore tons 17,975,000
------------------------------------------ ----------------- ------------------------------
Total Tons ore & waste tons 53,235,000
Contained copper lbs 180,363,000
Contained zinc lbs 66,181,000
Contained copper tons 90,182
Contained zinc tons 33,091
Copper Recovery % 76
Zinc Recovery % 50
Scheduled Ore Production per day 4,000
Scheduled Ore Production per year 1,600,000
Mine life years 11
Average annual copper production years
1-9 tons 7,000
Average annual zinc production years
1-9 tons 1,600
Plus leaching low grade stockpile years 9 to 11
LOM copper cathode produced tons 68,500
LOM zinc produced tons 16,500
REVENUE
------------------------------------------ ----------------- ------------------------------
LOM average Cu price $/lb 3.25
LOM average Zn price $/lb 1.35
LOM net revenue after royalties, freight,
insurance & TC $ 461,346,000
Revenue S/ton ore 26.11
OPERATING COSTS
------------------------------------------ ----------------- ------------------------------
LOM operating costs $ 259,253,000
LOM ave operating cost $/ton ore 14.69
LOM ave operating cost $/lb Cu Equ 1.72
LOM EBITDA $ 202,093,000
CAPITAL COSTS
------------------------------------------ ----------------- ------------------------------
Pre production capital costs $ 50,578,000
LOM Sustaining capital costs $ 25,306,000
PROFIT AFTER TAX
------------------------------------------ ----------------- ------------------------------
LOM Federal & State tax $ 24,757,000
LOM profit after tax $ 177,336,000
Ave annual after tax profit in years
1 to 5 $ 21,940,000
Ave annual after tax profit in years
6 to 11 $ 11,273,000
RESULTS
========================================== ----------------- ------------------------------
Cu $/lb NPV (7%) IRR %
US$
========================================== ================= ==============================
3.75 85,444,479 45%
3.50 70,450,899 40%
3.25 55,457,319 33%
3.00 40,463,738 27%
2.75 25,470,158 20%
Qualified Person
The information in this announcement has been reviewed by Roger
Turner A.C.S.M., M.Sc., M.I.M.M.M., C.Eng., Chief Technical Officer
and Director of the Company. Mr Turner is a graduate mining
engineer from the Camborne School of Mines with an MSc in Economic
Geology from Leicester University with more than 40 years'
experience in mine development, construction and operation and is a
qualified person under the AIM Rules. Mr Turner consents to the
inclusion of the information in the form and context in which they
appear.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
**S**
Contacts
For further information please visit
www.phoenixcopperlimited.com or contact:
Phoenix Copper Limited Dennis Thomas / Richard Wilkins Tel: +44 7827
290 849 (Dennis)
/
+44 7590 216 657
(Richard)
SP Angel Lindsay Mair / Caroline Rowe Tel: +44 20 3470
(Nominated Adviser 0470
and Joint Broker)
----------------------------------- ------------------
Brandon Hill Capital Jonathan Evans / Oliver Stansfield Tel: +44 20 3463
(Joint Broker) 5000
----------------------------------- ------------------
Medea Natural Resources Leonidas Howden / Fred White Tel: +44 20 7770
Ltd (Financial Advisor) 6926
----------------------------------- ------------------
Blytheweigh Tim Blythe / Camilla Horsfall Tel: +44 20 7138
(Financial PR) / Megan Ray 3204
----------------------------------- ------------------
Notes
Phoenix Copper Limited is a North American focused, base and
precious metal explorer and developer, which is fast-tracking the
historically-producing Empire Mine in Idaho, USA, back into
production, and exploring for cobalt in Idaho.
Phoenix's flagship project is a brownfield, past producing,
copper, gold, silver, zinc and tungsten underground mine, the
Empire Mine near Mackay in Idaho. Phoenix acquired an 80% interest
in the property in 2015. Based on a total of 320 drill holes an
oxide resource was completed in late 2017. A NI 43-101 compliant
PEA (preliminary economic assessment) for an open pit heap leach
solvent extraction and electrowinning ("SX-EW") mine was completed
in April 2018. In June 2018 a drilling campaign consisting of 8,600
metres in 93 holes was started and completed in late 2018. This
programme was designed to upgrade and increase the oxide resources,
provide samples for ongoing metallurgical testwork, geotechnical
and hydrological studies and condemnation drilling for the heap
leach pad site, waste dump and plant site. An updated NI 43-101
compliant resource was completed in early May 2019 which resulted
in an increase from the PEA resources of 37% contained copper and
108% contained zinc. This resource has been used for this economic
analysis and will now be used as the basis for the Bankable
Feasibility Study ("BFS") scheduled for completion in mid 2020.
At Empire, it is estimated that only 1 to 2% of the potential
ore system has been explored to date and, accordingly, there is
significant opportunity to increase the resource through phased
exploration; the current resources relate to the oxide resource
only, with the exception of the Red Star discovery "Inferred"
resource, which remains open along strike and does not include the
deeper, higher grade sulphides. In addition, Phoenix has increased
the claim area from 818 acres at the time of its acquisition to
5,717 acres, mainly to the northwest and west, and in so doing has
increased the potential for additional oxide and sulphide resources
by a total strike length of approximately 2,500 metres towards
another brownfield mine, the Horseshoe Mine, which is now within
the property boundary.
The Company also holds two prospective cobalt properties in
Idaho, US, which are located north of the Empire Mine. These are
situated close to the town of Cobalt and are close to projects
being advanced by Canadian junior miners, including eCobalt
Solutions and First Cobalt. Fieldwork, consisting of mapping and
sampling and locating drill holes for the 2019 drilling programme,
has been completed.
With a management team that has successfully constructed,
commissioned and operated mines and low risk, mining-friendly
jurisdictions with excellent infrastructure, Phoenix is looking to
fulfil its ambitions to become a mid-tier base metal, precious
metal and cobalt production company, offering exposure to high
value and high demand metals with compelling demand/supply
fundamentals.
More details on the Company, its assets and its objectives can
be found on PXC's website at www.phoenixcopperlimited.com.
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END
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