TIDMPXC
RNS Number : 1807P
Phoenix Copper Limited
16 February 2021
Phoenix Copper Limited / Ticker: PXC / Sector: Mining
16 February 2021
Phoenix Copper Limited
("Phoenix" or the "Company")
Empire Mine Open Pit updated economic model delivers $105*
million pre-tax 7.5% NPV
Phoenix Copper Ltd (AIM: PXC, OTCQX: PXCLF), the AIM quoted
North American focused base and precious metals emerging producer
and exploration company, is pleased to announce that it has
completed a new economic model for the Empire Mine open pit project
in Idaho, USA to recover copper, zinc, gold and silver.
Highlights
- Copper led US mining operation with production targeted for 2022
- The updated Economic Model ("EM") for the Empire Mine open pit
project indicates strong cashflow and rapid payback in less than
two years
- 10-year Life of Mine ("LOM") processing a total of 14.3
million tonnes Measured & Indicated ("M&I") ore at a 0.5%
copper cut-off grade
- Considerable opportunity to extend the LOM through exploration
and development funded from project cashflows
- Two phased processing to recover copper, zinc, gold and silver
o Phase 1 heap leach project, a seven-year operation processing
2.1 million tonnes per year, producing copper and zinc from years
one to seven of the LOM
o Phase 2 agitation leach project, a seven-year operation
processing ore from Phase 1, producing gold and silver from years
four to 10 of the LOM, using environmentally friendly ammonium
thiosulphate ("ATS") processing reagent
- LOM revenue of $784 million, producing average annual
production of 8,550 tonnes of copper, 1,970 tonnes of zinc, 17,235
ounces of gold and 680,050 ounces of silver
- Initial head grade of 0.70% copper
- Pre-production capital cost of $52.6 million
- LOM copper equivalent cash operating cost of $1.83 / lb
- LOM gold equivalent cash operating cost of $1,190 / oz
- LOM EBITDA of $310 million and post-tax cash flow of $155 million
- 7.5% base case NPV of $105 million pre-tax (57% IRR) and $88 million post-tax (47% IRR)
- 7.5% NPV of $157 million pre-tax (77% IRR) and $140 million
post-tax (68% IRR) with 10% increase in metal prices
- Encouraging project economics to support debt finance to minimise dilution
- Ongoing optimisation of the project to improve the economics and extend the mine life
* Assumes metal prices of $3.60/lb copper, $1.20/lb zinc,
$1,825/oz gold and $27/oz silver.
Ryan McDermott, Chief Executive Officer, commented: " The
updated EM shows an impressive "starter" operation that delivers
revenue of $784 million with a pre-tax 7.5% NPV of $105 million and
an IRR of 57%. This significant increase in the NPV from the
previous EM ( August 2019) is a product of increased M&I
resources, a higher head grade for copper, the use of ATS to
recover gold and silver, and an increase in ore processing capacity
from 1.6 to 2.1 million tonnes per year. The NPV is also well in
excess of pre-production capital costs.
"In conjunction with Hard Rock Consulting LLC ("HRC") of
Lakewood, Colorado, the Phoenix team has developed this model using
the drilling, metallurgical, and engineering data completed since
the last reported EM. The work that has been completed since that
time has resulted in a base case model with a 10-year operating
life that produces the full suite of Empire metals; copper, zinc,
gold, and silver.
"The addition of gold and silver production from the Empire open
pit, made possible by last year's drilling and metallurgical test
work, has contributed significantly to our project's positive
economics. The new model uses a 0.5% copper cut-off grade and
assumes mining and processing of 14.3 million tonnes of M&I ore
in two phases, leading off with copper and zinc production in the
first three years of operations, and adding gold and silver
production from the fourth year of operations.
"This two phase plan allows for the initial production of copper
and zinc by heap leaching over a seven year open pit mine life,
followed by the rehandling of the heaps into a gold and silver
recovery circuit beginning in Year 4 and continuing through to year
10. For the purposes of this EM, open-pit operations currently end
in Year 7, although we are confident that we will extend this mine
life. The initial capital requirement for this two-phase approach
is estimated at $52 million, and the model indicates that, at
current metal prices, the mine can pay back this initial capex in
less than two years.
"This new Empire EM is timely, coinciding with elevated copper
and silver markets, a stable zinc market, and a respectable gold
price. The new administration in Washington D.C. is actively
encouraging the clean energy revolution which would include the
development of metals essential for electrification projects. Our
Empire copper resources fit neatly into that category, as will our
use of environmentally friendly ATS for the processing of our
precious metals. I expect to see these positive trends continue as
we move further away from the uncertainties of 2020.
"We continue to be focused on optimising and refining the
project in order to submit our Plan of Operations for Phase 1 of
the project in order to commence the final stages of the production
permitting process, with production still targeted for 2022.
Metallurgical test work and mine optimisation and engineering is
ongoing, with a view to improving the project economics and
extending the mine life. This will be achieved by processing
additional existing M&I resources, and by adding Inferred
resources to the production schedule once they have been upgraded
to M&I.
"We are also looking forward to a rewarding exploration season,
particularly at our recently discovered Red Star high grade
silver-lead zone at Empire, and the Navarre Creek gold property.
The planning and scheduling of geophysical surveys and drill
targeting at both these properties is underway, and we hope to be
drilling on both properties this summer. This is an exciting time
for our Company and I look forward to providing shareholders with
further updates as they become available."
Empire Mine Economic Model Summary - Base Case
HEAP LEACH ATS
SX -EW AGITATION
LEACH
Cu/Zn OPERATION Au/Ag OPERATION
YEARS 1 YEARS 4
TO 7 TO 10
PRODUCTION
---------- --------------------------
Total ore (at a 0.5% copper
cut-off) tonnes 14,317,207 14,317,207
Total tonnes ore & waste tonnes 55,018,098
Contained copper tonnes 76,556
Contained zinc tonnes 26,782
Contained gold ounces 141,205
Contained silver ounces 6,005,694
Copper recovery % 76
Zinc recovery % 50
Gold recovery % 83
Silver recovery % 77
Scheduled Ore Production per day 5,625 5,625
Scheduled Ore Production per year 2,100,000 2,100,000
Mine life years 6.8 6.8
Copper recovered (LOM) tonnes 58,183
Zinc recovered (LOM) tonnes 13,391
Copper equivalent recovered
(LOM) tonnes 62,647
Average annual copper equivalent
production years 1 to 7 tonnes 9,213
Saleable gold recovered (LOM) ounces 117,200
Saleable silver recovered
(LOM) ounces 4,624,384
Gold equivalent recovered
(LOM) ounces 185,616
Average annual gold equivalent
production years 4 to 10 ounces 27,296
REVENUE (LIFE OF MINE)
----------
Copper price $/pound 3.60
Copper revenue $ 461,776,280
Zinc price $/pound 1.20
Zinc revenue $ 35,426,448
Net Cu/Zn revenue after royalties,
freight, insurance & TC $ 467,212,591
------------------------------------ -----------------------
Gold price $/oz 1,825
Gold revenue $ 213,889,626
Silver price $/oz 27.00
Silver revenue $ 124,858,374
Net Au/Ag revenue after royalties,
freight, insurance & TC $ 316,405,194
------------------------------------ -----------------------
OPERATING COSTS (LIFE OF MINE)
---------- --------------------------
Mining $ 102,575,000 10,725,000
Processing $ 128,533,000 203,339,060
G&A and property tax $ 21,690,000 6,809,524
Total operating costs $ 252,798,000 220,873,584
------------------------------------ -----------------------
$/tonne
Cash operating cost ore 17.66
$/lb
copper
Cash operating cost equ 1.83
$/tonne
Cash operating cost ore 15.45
$/oz
gold
Cash operating cost equ 1,190
EBITDA (LIFE OF MINE) $ 214,414,591 95,531,610
----------
CAPITAL
COSTS
Pre-production capital costs $ 52,673,000 36,837,000
Sustaining capital $ 24,175,000 7,000,000
Equipment finance costs $ 10,635,000
PRE-TAX
CASH FLOW
(LIFE OF
MINE) $ 126,931,591 51,694,610
---------
Federal & State tax $ 17,069,000 7,605,028
POST-TAX
CASH FLOW
(LIFE OF
MINE) $ 109,862,591 44,089,582
---------
Ave annual Cu/Zn post-tax
cash flow in years 1 to 7 $ 16,156,263
Ave annual Au/Ag post-tax
cash flow in years 4 to 10 $ 6,483,762
------------------------------------ ----------------------- --------------------------
LOM NPV Pre Tax Post Tax
-------- ------------ ------------
5.0% 124,951,217 105,707,169
7.5% 105,171,561 87,995,963
10.0% 88,211,433 73,394,787
Metal Price LOM NPV (7.5%) IRR %
Sensitivity Pre Tax Post Tax Pre Post
Tax Tax
------------ ------------ ----- -----
+10% 157,429,610 139,842,247 77 68
0 105,171,561 87,995,963 57 47
-10% 52,913,511 36,382,354 34 25
------------ ------------ ----- -----
Background on the Empire Mine Open Pit Project
This updated EM has been prepared in conjunction with HRC, has
been derived following the publication in October 2020 (reported on
9 December 2020) of an updated NI 43-101 compliant resource, which
incorporated the 32 hole, 1,700-metre Empire 2020
reverse-circulation and core drilling programme results. The new
economic model uses current market data and will form the basis of
the operating plan for permitting purposes, and future feasibility
studies.
Further mine planning and optimisation has resulted in an
economic model utilising two separate processing circuits, with
approximately 14.3 million tonnes of ore production, at 2.1 million
tonnes per annum at a 0.5% copper cut-off grade, over the initial
seven years. The ore will be processed sequentially, first for
copper-zinc utilising standard heap leach SX/EW, followed by
gold-silver recovery in an ATS circuit. In Year 4 of operations,
the ore previously leached for copper-zinc will be moved from the
Phase 1 leach pad and introduced to the gold-silver circuit. The
heaps will be staged such that copper-zinc leaching can continue
with ore stacked to the pad in Years 4 through 7, and then moved to
the precious metals circuit after the copper-zinc recovery reaches
its optimal level. Open-pit operations currently end in Year 7 with
residual copper-zinc leaching continuing through maximum recovery,
and the gold-silver circuit operating through to Year 10.
The Company has used the pit production schedule prepared by
HRC, and production, capital and operating cost estimates prepared
by Phoenix staff in conjunction with HRC.
The model is summarised above and can also be found on the
Company's website at www.phoenixcopperlimited.com .
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.
Environmental, Social, and Corporate Governance
Phoenix is committed to meeting and exceeding the environmental
standards required by law as a core value of the Company. The
baseline environmental data collected to date will be used for
furthering the permitting process, but as importantly, will be used
as the building blocks for the Company's future Environmental,
Social, and Corporate Governance ("ESG") platform.
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.
Contacts
For further information please visit
www.phoenixcopperlimited.com or contact:
Phoenix Copper Ryan McDermott Tel: +1 208 954
Limited Dennis Thomas 7039
Richard Wilkins Tel: +44 7827
290 849
Tel: +44 7590
216 657
SP Angel (Nominated David Hignell / Caroline Rowe Tel: +44 20 3470
Adviser) 0470
----------------------------------- -----------------
Brandon Hill Capital Jonathan Evans / Oliver Stansfield Tel: +44 20 3463
(Joint Broker) 5000
----------------------------------- -----------------
WH Ireland (Joint Harry Ansell / Adam Pollock Tel: +44 207
Broker) / Katy Mitchell 2201666
----------------------------------- -----------------
EAS Advisors (US Matt Bonner / Rogier de la Tel: +1 (646)
Corporate Adviser) Rambelje 495-2225
----------------------------------- -----------------
Blytheweigh Tim Blythe / Megan Ray Tel: +44 20 7138
(Financial PR) 3204
----------------------------------- -----------------
Notes
Phoenix Copper Limited is a North American focused, base and
precious metal emerging producer and exploration company, which has
carried out a drilling programme and generated a copper, gold,
silver and zinc resource on which it is carrying out a feasibility
study to bring the historically producing Empire Mine in Idaho,
USA, back into production. It is also evaluating the silver and
gold resources around three other past producing mines within the
23 km (2) Empire claims block as well as cobalt in two claims
blocks north of Empire in Idaho.
Phoenix's primary operations are focused near Mackay, Idaho in
the Alder Creek mining district. This district includes the
historical Empire, Horseshoe, White Knob and Blue Bird Mines, past
producers of copper, gold, silver, zinc, lead and tungsten from
underground mines in the first half of the twentieth century.
Additionally, the district includes Navarre Creek a Carlin-trend
gold discovery which hosts a 6.1 km gold strike length within a 9.8
km(2) area.
Phoenix acquired an 80% interest in the historical Empire Mine
property in 2017 and, 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 2018 a further 8,600 metres in 93 holes was
completed to upgrade the oxide resources, provide samples for
ongoing metallurgical test work, 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 2020 and October 2020 for all metals.
Present contained metal in all NI 43-101 compliant categories of
resources, measured, indicated and inferred, stand at 355,523
ounces of gold, 129,641 tonnes of copper, 10,133,772 ounces of
silver and 58,440 tonnes of zinc. Following the latest NI 43-101
compliant resource, Phoenix updated its economic model in February
2021 to include the processing of all contained metals through a
two phased approach.
Since acquiring the Empire project, Phoenix has increased the
claim area from 818 acres to 5,717 acres, mainly to the northwest
and west, and in so doing has increased the potential for
additional oxide and sulphide copper resources, as well as the
potential for stand-alone gold and silver resources, along a strike
length of approximately 5.4 km towards the other brownfield mines
of the Horseshoe, White Knob and Blue Bird Mines now within the
property boundary. In particular, a new discovery at Red Star, 330
metres north west of the Empire Mine proposed open pit, has
revealed sulphide ore and from three shallow exploration drill
holes a NI 43-101 compliant maiden resource of 1.6 million silver
equivalent ounces was reported.
At Empire, it is estimated that less than 1% of the potential
ore system has been explored to date and, accordingly, there is
significant opportunity to increase the resource through phased
exploration.
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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