VANCOUVER — Philippines-focused Crazy Horse Resources (CZH-V) has outlined a 15-million-tonne-per-year open-pit copper operation at its Taysan project in a prefeasibility study.
The mine plan, like the November scoping study before it, splits the project into two stages rather than the original plan to have a larger 30-million-tonne-per-year mine. The switch has cut initial capital costs significantly and overall improved the financials of the project.
The study has outlined a 24-year mine life for the first stage of the project that is expected to produce 1.82 billion lbs. copper, 240,000 oz. gold, 19,000 oz. silver and 381,000 tonnes of magnetite for 2.46 billion lbs. copper equivalent over the life-of-mine. The plant is expected to achieve 90% copper recoveries and produce a 24.5% copper concentrate with gold and silver credits.
Using a US$3 per lb. copper price and a 10% discount rate, the financials work out to a post-tax net present value of US$512 million with a 30.4% internal rate of return, or a NPV of US$503 million and a 49.2% IRR after factoring in expected mine financing of 65% debt and 35% equity.
The Taysan project sits a little over 100 km south of Manila by paved highway and is only 20 km away from the port of Batangas. The company will be able to source labour and power from the port area, while Crazy Horse also owns a port facility there though it still owes $10 million for the facility. The company plans to ship a copper concentrate of roughly 24.5% with gold and silver credits and produce magnetite as a by-product. Copper recoveries are estimated to be roughly 90%.
Initial capital costs are expected to be US$502 million, while average operating costs are projected to be US$1.68 per lb. copper for life of mine and US$1.18 per lb. copper for the first five years of operation. The capex compares with slightly over a billion dollars for an earlier study that includes constructing a coal-fired power plant for the project.
The company will be mining 353 million probable reserve tonnes grading 0.27% copper, 0.11 gram gold, 0.9 gram silver and 3.4% magnetite, while high grade starter pits have higher grades of 0.39% copper, 0.17 gram gold, 1.5 grams silver and 4.2% magnetite for the first five years. The strip ratio is expected to be 1:1.
There is room for potential mine expansion with the project hosting 459 million measured and indicated tonnes grading 0.26% copper plus some gold, silver, and magnetite and inferred resources of 509 million tonnes grading 0.18% copper and some gold, silver, and magnetite.
The company reports that the deposit is a typical copper-gold porphyry hosted by several quartz-diorite intrusive bodies with a high-grade core consisting of breccias and quartz-magnetite vein stockworks. Emplacement of the diorite and ore is controlled by regional crosscutting faults. Geological mapping and ground geophysics indicate that exploration potential exists in the company's land holdings to discover new deposits.
Crazy Horse stated that the deposit sits in an area of low-productivity agriculture with no communities, sensitive habitat or endangered animal species on the planned site. For the 31,802 cubic metres of water needed per day, the company plans to source 75% from recycled tailings water and 25% from local fresh water sources.
As of last October the company is led by Mitchell Alland as President and CEO, who also took over the role of Chairman in November. Alland is also the CEO of London AIM-listed Copper Development, which controls 11.8% of Crazy Horse’s shares.
Crazy Horse’s share price climbed 3¢ or 14.2% to 24¢ on the latest news with 544,000 shares traded. The company has roughly 64.5 million shares out and had $3-million in cash at the end of January.
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