Robert Friedland’s latest venture looks to be following a familiar template. On Jan. 17, Vancouver-based Ivanplats (IVP-T) updated the resource estimate on its Kamoa copper discovery in the Democratic Republic of the Congo, boosting resources by 115% while maintaining superior grades that place it amongst the world’s largest undeveloped copper prospects.
Located 270 km west of Lubumbashi in the country’s southeast, Kamoa is a large, sediment-hosted stratiform copper deposit in the Central African Copperbelt. Ivanplats owns 95% in the project, though the company will sell an additional 15% to the DRC government to satisfy domestic ownership demands.
Ivanplats’ updated resource incorporates 555 drill holes and boosts indicated resources to 739 million tonnes grading 2.67% copper for 43.5 billion contained lb. copper at a 1% copper cut-off. Perhaps more impressive is the increase in high-grade copper resources: At a 3% copper cut-off the deposit hosts 224 million tonnes averaging 3.85% copper, which could give Ivanplats an advantage in planning early stage mining sequences.
“The combination of large tonnages and high copper grades establishes Kamoa as the largest high-grade copper discovery in Africa — and one of the largest undeveloped copper deposits in the world,” executive chairman Friedland comments in a release, noting that many new copper deposits average in the 0.3% to 0.6% copper equivalent range.
“In fact, among large-scale, undeveloped, primary copper deposits, characterized as having resources larger than 750 million tonnes, Kamoa has one of the highest copper grades in the world,” he adds.
CEO Lars-Eric Johansson explains that Ivanplats achieved a major goal during its 2012 drilling season by converting a large amount of its inferred resources into the indicated category. The company also maintains a sizable inferred base of 227 million tonnes at 1.96% copper for 9.8 billion contained lb.
Ivanplats reports a true thickness at Kamoa of 2.4 to 17.4 metres at a 1% copper cut-off, and describes a “relatively flat-lying” deposit that dips between zero and 20 degrees to the east. The company has intersected mineralization at depths exceeding 1.5 km.
The high-grade, bornite-chalcocite mineralization remains open downdip and along strike to the south.
Friedland notes that Kamoa’s resource covers only a small portion of a 400-sq.-km land package where Ivanplats holds full mining licences. The area surrounding the deposit is classified as an exploration target, where the company has estimates it could find another 520 million to 790 million tonnes grading between 1.6% and 2.5% copper.
“Kamoa is unique in its size and grade, a fact now recognized by many industry and sovereign investors in the copper-mining industry. Ivanplats believes that significant advantages could be realized from the participation of one or more strategic partners,” Friedland says.
The expanded resource will be the foundation of an updated preliminary economic assessment (PEA) pegged for release in the first half of 2013.
Ivanplats initially modelled a US$2-billion development at Kamoa that would operate at a throughput rate of 5 million tonnes per year, and produce 143,000 tonnes of payable copper annually over an initial 10-year period, at cash costs totalling US$1.19 per lb.
Assuming a US$3.50 per lb. copper price, the initial PEA returned a $2 billion after-tax net present value and a 21.5% internal rate of return at a 10% discount rate.
Due to the expanded indicated tonnage and lateral extent of the deposit, Ivanplats believes annual mining rates could range anywhere from 5 million to 20 million tonnes by operating “multiple mining areas and a series of production expansions to maximize extraction.”
BMO Capital Markets analyst Stephen Bonnyman notes in a Jan. 17 research update that the higher-grade core at Kamoa should benefit economics once incorporated into an updated mine plan. Bonnyman maintains a “market perform” rating on Ivanplats, and boosted his target price to $5.90 per share.
“The increasing delays in many new copper projects and the rising constraints on potential new supply raise concerns regarding long-term pricing and project growth for many companies,” Bonnyman writes. “While the company offers some of the most exciting long-term development opportunity in the market, a technical update and near-term financing need to be confirmed for valuations to fully surface.”
Following the Kamoa update Ivanplats’ shares briefly approached an all-time high at $5.35 during midday trading before settling out the day up 4%, or 21¢, at $5.30.
The company had 527 million shares outstanding at press time, which equates to a $2.8-billion market capitalization.
In late October Ivanplats closed a $300-million initial public offering on the Toronto Stock Exchange.
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