Sandfire advancing on multiple fronts
Sandfire Resources has reported record quarterly copper production, as well as the feasibility study for its Black Butte development in the US and a new farm-in agreement in New South Wales (reports MiningNews)
30th October 2020
Resources Rising Stars
Sandfire Resources has reported record quarterly copper production, as well as the feasibility study for its Black Butte development in the US and a new farm-in agreement in New South Wales (reports MiningNews).
he long-awaited study for the Black Butte project in Montana, held by 85%-owned subsidiary Sandfire Resources America, outlined capital costs of US$274.7 million for an eight-year, 1.2 million tonne per annum operation.
Average annual copper production will be about 23,000 tonnes at a C1 cost of US$1.51 per pound.
Average annual post-tax cashflow is expected to be $77.8 million per annum for the first five years of operations.
The project is forecast to generate revenue of $1.3 billion and pre-tax net cashflow of $518 million in, based on a copper price of $3.20/lb.
The project has a post-tax net present value (5% discount rate) of $77.6 million and internal rate of return of 13%.
The study was based on a maiden reserve of 8.8Mt at 2.6% copper for 226,100t of copper for the Johnny Lee upper and lower zones.
The study did not include any contribution from the Lowry deposit, 3km from Johnny Lee, for which a maiden inferred resource of 8.3Mt at 2.4% copper for 199,500t was reported.
"The completion of the Black Butte feasibility study for the Johnny Lee deposit marks another important milestone towards the development of a state-of-the-art underground mining project in Montana that meets the highest environmental standards, while also creating significant economic and social benefits for the state of Montana," Sandfire managing director Karl Simich said.
"Having completed the extensive permitting process for Black Butte - which is the first mining project in Montana to be permitted in over two decades - we are well placed to continue to advance this high-quality, high-grade copper development asset in a measured and sensible manner, and also to respond to and deal with the legal challenges that have been filed in recent months."
A legal challenge to the issuance of the mine operating permit is underway and has the potential to delay the project.
RBC Capital Markets estimates the delay could be 12-18 months.
Sandfire will also finalise the optimised feasibility study for the T3 project in Botswana during the current quarter, which is expected to be developed sooner than Black Butte.
The company will also report a maiden inferred resource for the high-grade A4 Dome deposit, which has the potential to culminate in a production hub in Botswana.
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