VANCOUVER — Robert Friedland's latest Vancouver-based venture looks to be following a familiar template. On Jan. 17 Ivanplats (IVP-T) released an updated resource on its Kamoa discovery in Central Africa that boosted the project's resources by 115% and maintains superior grades that place it amongst the world's largest undeveloped copper prospects.
Located 270 km west of Lubumbashi in the Democractic Republic of Congo (DRC), Kamoa is a massive, sediment-hosted stratiform copper deposit that lies along the Central African copper belt. Ivanplats currently owns 95% of the project, though the company has agreed to sell an additional 15% to the DRC government to satisfy domestic ownership demands.
Ivanplat's updated resource incorporates 555 drill holes and boosts indicated rsources to 739 million tonnes grading 2.67% copper for 43.5 billion lbs. contained metal at a 1% copper cut-off. Perhaps more impressively is the increase in high-grade copper resources. At a 3% copper cut-off the deposit holds 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 very 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," commented Friedland, 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 added.
CEO Lars-Eric Johansson explained 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 succeeded in maintaining a strong inferred base with 227 million tonnes averaging 1.96% copper for 9.8 billion contained lbs.
Ivanplats reports a true thickness at Kamoa of between 2.4 metres and 17.4 metres at a 1% copper cut-off, and outlines a "relatively flat-lying" deposit that dips between zero and 20 degrees from west to east. The company has intersected mineralization at depths exceeding 1,500 metres. The high-grade, bornite-chalcocite mineralization remains open down-dip to the east and along strike to the south.
Friedland noted that Kamoa’s resource covers only a small portion of a 400-sq.km land package where Ivanplats holds full mining licenses. The area surrounding the current deposit is classified as an exploration target, where the company has published tonnage-and-grade estimates that claim an additional 520 to 790 million tonnes could be discovered averaging 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 added.
The company intends to use the expanded resource as a foundation for 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 five 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 21.5% internal rate of return at a 10% discount rate.
Due to the expanded indicated tonnage and lateral extent of the deposit Ivanplats now believes potential mining rates could range anywhere from five million tonnes per year to 20 million tonnes per year through the operation of "multiple mining areas and a series of production expansions to maximize extraction."
Bank of Montreal (BMO) Capital Markets analyst Stephen Bonnyman noted the established high-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 in a Jan. 17 research update. "While the company continues to offer 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 mid-day trading before settling out the day up 4% or 21¢ at $5.30. The company maintains 527 million shares outstanding at time of writing, which equates to a $2.76 billion market capitalization. In late October Ivanplats successfully closed a $300 million initial public offering on the Toronto Stock Exchange.
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