A definitive feasibility study on the Karchiga volcanogenic massive sulphide deposit in northeastern Kazakhstan demonstrates that the project can be developed as a high-grade, medium-cost open-pit copper mine with a rapid payback period, London-based Orsu Metals (OSU-T, OSU-L) says.
The proposed mine is expected to produce a total of 328 million pounds of payable copper over the course of its 11.5 year mine life with an average of 28.57 million pounds of copper production a year. The start of construction should get underway in the third quarter of this year and Orsu believes it can build the processing facilities and complete pre-production development work within a 12-15 month period.
Initial capital expenditures excluding the solvent extraction and electrowinning plant and sustaining capital and closure costs has been estimated at US$115 million, which can be paid back in just under three years. Total capex is estimated to reach about US$147 million.
The base and precious metals exploration and development company acquired the project licence in 2007 and owns 94.75% of the project.
Karchiga's post-tax net present value measures about US$150 million with a 30% internal rate of return based on a copper price of US$3.25 per lb.
The mining schedule envisages the mining of 10 million tonnes of sulphide and oxide ore and 124 million tonnes of waste with a stripping ratio of 1:12.4 over the mine life. The average mining rate of the operation is 750,000 tonnes per year.
During the first 2.25 years the schedule includes open-pit mining only of the Central sulphide ore body to maximize the sulphide copper grade and recovery. The optimized mine schedule was developed to minimize the stripping ratio in the first three years of operation.
The company can increase the processed ore grade through stockpiling. From year four until year seven, sulphide ore will be mined from both the Central and North East open pits. From year eight until the end of the mine life in year twelve, all mining will continue in the North East pit.
The plant is designed to process about 750,000 tonnes per year of sulphide ore. A conventional processing route was chosen using relatively fine grinding and selective sulphide flotation to produce a 27.9% bulk concentrate. First production is scheduled for the fourth quarter of 2013 with final production in 2025.
Copper from the oxide ore will be extracted using the SXEW process. The oxides will be treated over a period of four and a half years beginning in 2018 at an annual production rate of 360,000 tonnes and the company expects to produce an average of 6.22 million pounds of copper cathode a year during that period.
In order to trim initial capital costs, construction of the SXEW plant has been delayed until after the initial capex payback period of 2.75 years. The plant has been designed to treat an average of 30,000 tonnes of leachable oxide ore per month.
The results of the feasibility study seem to demonstrate that the best economic option is to delay the SXEW construction until 2017, allowing Orsu to pay construction costs from revenues generated by the treatment of sulphide ore.
The project contains indicated resources of 10.8 million tonnes of combined sulphide and oxide mineralisation grading 1.73% copper for 412.7 million pounds of contained copper with inferred resources adding 0.02 million tonnes of sulphide mineralisation grading 1.28% copper for 0.7 million pounds of contained copper.
Using only the indicated resource estimate, the definitive feasibility study supports a probable reserve estimate of 8.5 million tonnes of sulphide ore in the Central and Northeast pits for 320 million pounds of contained copper at an average copper grade of 1.71% that will be amenable to flotation, and an additional 1.5 million tonnes of ore in the Central pit containing 47.2 million pounds of contained copper at an average copper grade of 1.43% amenable to heap leaching.
The Karchiga project is about 40 km west of the China-Kazakshtan border and about 50 km to the north of the Irtysh River. It is also 250 km southeast of the regional administrative centre of Ust-Kamenogorsk and 120 km southeast of the town of Kurchum. The nearest village of Altai is 8 km from the deposit.
Karchiga is 10 km from a main road and can be connected to a 110-kilovolt national power grid nearby. The company says water supply from the Kalzhir River will be adequate for the project and that water can also be sourced from aquifers in the area.
The Karchiga deposit lies within the Vavilon-Karchiga zone of the northwest striking, mid-Palaeozoic, Rudny Altai VMS belt, which hosts numerous VMS deposits including Leninigorsk, Zyryanovsk and Maleevsky. The Rudny Altai VMS terrane is ranked in the top four VMS belts of the world, the company states on its website.
The deposit was first explored as early as 1936 and then again from 1941-1942 when the first historic resource was completed. The Soviets explored it more thoroughly in the 1950s during which time 104 holes were drilled for a total of 18,463 metres along with 33 surface trenches (1,980 metres).
News of the feasibility study sent the Toronto-listed shares of Orsu up 1.5¢ or 9.1% to close at 18¢ a share on 1.4 million shares traded. Over the last year Orsu has traded within a band of 9.5¢ and 31¢. The junior has about 158 million shares outstanding.
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