ASX-listed exploration and development company Nzuri Copper has completed an updated feasibility study for the proposed Stage 1 development of its flagship 85%-owned Kalongwe copper-cobalt project in the Democratic Republic of Congo.
Democratic Republic of Congo – The updated Stage 1 feasibility study (FS) was based on revised pricing (reflecting continued increases in the cobalt price) and point-of-delivery.
The results have further reinforced the project’s exceptional financial and technical merits, delivering significantly enhanced financial returns.
The updated FS includes an updated ore reserve estimate for Kalongwe of 7.99 Mt at 2.94% copper and 0.34% cobalt for 234 868 t of contained copper and 27 102 t of contained cobalt. This represents an 11% increase in contained copper and 8% increase in contained cobalt compared with the maiden ore reserve published in October 2017.
The updated FS (which was completed to an accuracy of +15%) further reinforces the technical and financial viability of the previously outlined Stage 1 development.
The project scope and capital requirements for Stage 1 remain unchanged and comprise an open pit mining operation using an on-site 1 Mtpa dense media separation (DMS) processing plant to produce two high-quality dry saleable concentrate products suitable as a feedstock for off-site SX-EW processing.
The principal areas of the updated FS include:
- Updated long-term cobalt pricing of US$81 500/t; and
- Updated point-of-delivery for product produced by the DMS plant, namely Kolwezi, as opposed to Lubumbashi.
Kolwezi continues to emerge as a key strategic centre for the purchase and processing of concentrates in the DRC and Nzuri Copper has progressed discussions with several potential off-takers since the original FS was completed in 2017.
Incorporating the revised pricing and point-of-delivery, the project is forecast to produce 137 848 tpa of DMS and spiral concentrate products, equivalent to annual average metal production of 18 657 tpa of copper and 1 370 tpa of cobalt.
The overall economics of the project are considerably better than those presented in October 2017 and the project is exceptionally robust and value-accretive, with the updated FS assuming transportation of concentrate 77 km by road to Kolwezi.
Key financial highlights include an unchanged low capital cost outlay of $53.12 million and an unchanged rapid project construction timeline of just 12 months.
Economics and financial returns are significantly improved, including a pre-tax NPV of $186 million, a post-tax NVP of $130 million and a pre-tax/post-tax internal rate of return of 99%-76%, driven by the revised cobalt pricing and reduced delivery distance of the finished concentrate.
Moreover, a preliminary economic analysis (PEA) of SX-EW processing has also been completed which highlights further potential increases to the returns and mine life from higher copper-cobalt output and revenue.
One option has been selected for further evaluation as a potential Stage 2 to the DMS construction, comprising a full SX-EW plant and cobalt circuit to process DMS-generated rejects and cobalt-only ore.
This Stage 2 expansion option, which can be funded from cash-flows from the Stage 1 DMS, will be incorporated into the recently commenced front-end engineering design (FEED) program for Stage 1.
“The Kalongwe copper-cobalt project continues to go from strength to strength. The updated Stage 1 FS has delivered an impressive pre-tax NPV and IRR and increased ore reserve which now underpins an 8-year mine life.
“This incorporates updated, though still conservative, cobalt pricing assumptions. It is also based on an enhanced point-of-delivery at Kolwezi based on advanced discussions with potential off-takers completed since the 2017 FS,” says Nzuri Copper CEO and executive director Mark Arnesen.
“In conjunction with these outstanding results, the recently completed Stage 2 PEA has captured the value potential of a larger SX-EW development. This has confirmed our view that there is huge upside in the project which can be unlocked through future staged expansions funded from Stage 1 cash-flows. The results provide a clear roadmap that will help guide the detailed FEED of the project, which is about to commence.
“Our immediate focus over the next few months is to advance appropriate funding solutions and, with the support of our cornerstone shareholders, deliver Stage 1 as quickly as we can while keeping in mind the best way of pursuing SX-EW processing. At the same time, we are continuing to pursue aggressive exploration aimed at growing our resource inventory and mine life at numerous exciting near-mine and regional targets,” says Arnesen.