These predictions come from Joe Hamilton, chief executive officer of African Copper plc – the Londonbased international mineral and exploration company behind the project – in an exclusive interview with Mining Review Africa.
“The new mine’s production figure is difficult to confirm right now,” he says. “The initial number we have in the public market is that we expect to be able to produce 20 000 tpa copper in concentrate on average over the six to eight-year life of the open pit mine.”
But he reiterates that production is grade-dependent. “We will be getting into very high-grade material by 2011/12,” Hamilton reveals, “in fact the grade almost doubles. Needless to say this can be expected to impact significantly on production.”
The company has just completed new pit studies at Dukwe, and is investigating the possibility of putting in a dense media separation (DMS) plant in an effort to reduce the cut-off grade of the pit. The intention is to release a new production schedule very shortly, once the cut-off grade in the pit has been determined.
OPEN PIT OR UNDERGROUND?
The other issue is the situation relating to the underground option. The questions to be answered are: is there a possibility of extended open pit mining; if not, exactly when would it be prudent to initiate underground mining; and if this is done before the end of the open pit operation in 2015, how would the open pit and underground operations be integrated?
“Because of the capital costs associated with establishing an underground mine, we are exploring for other open pit deposits to the south of Dukwe,” Hamilton explains. “Should we find another open pit deposit, the capital costs of bringing it into production would be far less than an underground project,” he points out.
“If we were to find another open pit option, we could get that into production in less than 18 months, and probably at a cost of around US$10 million (R70 million),” he estimates.
“By comparison, the establishment of a producing underground mine, with the associated infrastructure, would cost us close to US$50 million (R350 million) – and that is just to reach the upper levels and establish production, Obviously life of mine capital expenditure would be far higher,” he adds.
“Furthermore,” according to Hamilton, “from the time of decision to mine an underground operation, it will take at least 18 months before initial production, and several months more to ramp up to full production.”
ANSWERS BEFORE YEAR END
“We have an engineering team conducting an in-depth study into the various options right now,” he says, “and by the end of this year we will have the answers to those questions and some accurate facts and figures.
“I want to be in a position by the end of this year to know which way we intend going, and whether we are recommending an extended open pit operation or an underground mine,” Hamilton insists. “I want to be able to go to the Board for approval of specific recommendations by the end of 2007, and would like to be in a position to start breaking ground for an underground mine next year if that is our only option,” he contends.
One aspect that will remain much the same at Dukwe, whether open pit or underground, is operating costs. “We do not expect to see much of a change in the operating economics as we move from open pit to underground operations,” says Hamilton.
“The good news,” he adds, “is that we don’t need a huge pit to provide additional feed to the mill – a 1 million tonne pit could be put into production.”
Exploration has uncovered four good geophysical anomalies – two of which are larger than Dukwe, according to Hamilton. “We are currently putting two drill holes into each of them to see what we are dealing with. When we receive those results we will pick one to look at for delineation drilling to see what we can put together as a far as a resource is concerned,” he continues.
“The bulk of our resource is measured and indicated – and about 35 million tonnes is available to us in these categories at grades of around 1.5%,” he points out. “Of this, about 8 million tonnes is from the open pit, leaving the other 27 million tonnes as an underground resource, Hamilton claims. “If we go ahead with the installation of a DMS plant, we will be mining that underground resources at close to 2 Mtpa, which gives as an underground life of mine of close to 15 years,” he calculates.
PROJECT ON TIME AND ON BUDGET
As far as the initial US$60 million (R430 million) Dukwe project is concerned, it is on time and within budget. “We are tracking it very well,” Hamilton observes. “All long lead time items – as well as steel prices – have been locked in, so escalation is unlikely to be a factor. Equipment is moved on site as quickly as possible, and pre-production capital costs are expected to be between US$20 million (R140 million) and US$30 million (R210 million).
“African Copper’s business plan was to have at least one mine operating in the first five years of the company’s existence,” Hamilton recalls, “and we have achieved that objective within three years. Our other objective is to bring at least one or two other deposits in the Matsitama Belt into production within 10 years,” he continues.
Looking to the future, the company is conducting exploration programmes in the Matsitama concession, which is adjacent to Dukwe. The two prime areas of focus are the Thakadu copper-silver project and Nakalakwana Hill.
Drilling at Thakadu – which is 70 km south-east of the Mowana mine – has returned up to 4.5% copper and 70 g/t silver over mineable widths. A 10 000 m drilling programme has been completed, and a further nine high priority drill-ready targets and 35 lower priority targets have been identified.
“This is quite a mineralised province,” says Hamilton. “In addition to copper-silver, lead-zinc and iron ore-gold mineralisation, we have recently come across a nickel anomaly, and we will be doing additional trenching, mapping and geo-chemistry to confirm our findings,” he adds.
Raw Water Dam, receives water from well field and supplies process water to plant.
Initial estimates put the Thakadu copper resource at 4.7 million tonnes at a grade of 1.72%, giving a total content of almost 180 million lbs. There is also an estimated inferred copper resource of 960 000 tonnes at 1.29%, yielding content of almost 27.4 million lbs. The estimated silver resource at Thakadu is 3.5 million tonnes at 16 g/t, which amounts to content of almost 1.9 million ozs.
Extensive geophysics and drilling programmes are continuing at Nakalakwana Hill, and a resource estimate is planned to be completed this year.