Early figures point to sound economics at Barytex’s Shituru

VANCOUVER — A recently completed scoping study that forecasts robust economics at International Barytex Resources’ (IBX-V, IBYXFO) Shituru copper project, located in the Democratic Republic of the Congo (DRC), has the junior eyeing producer status.

The preliminary assessment indicates average production of roughly 75 million lbs. copper (34,000 tonnes) annually over a nine-year mine life at Shituru. The study put average cash costs at the proposed open-pit operation, in Katanga province, at US57 per lb. (exclusive of royalties).

“We are particularly pleased with the low cash costs and substantial copper production in the initial years of operation,” said company president Leo King in a statement.

Led by engineers Bateman Metals & Mining, the study pegs anticipated capital costs at US$228 million to build the operation, with production starting in 2011. The processing facility would have an annual capacity of 1 million tonnes for ore that averages 4.1% copper.

Based on a US$1.50-per-lb. copper price, the mine is expected to deliver a 12% internal rate of return (IRR), and a US$34-million net present value (NPV) at an 8% discount. The payback period is estimated at 3.8 years. At US$3-per-lb. copper, Shituru has a 42% IRR, US$405-million NPV and 1.5-year payback period.

The report is based on a resource estimate from last year that showed the project hosts 7.9 million indicated tonnes grading 4.4% copper and 0.08% cobalt (based on a 1% copper cutoff) in the Upper and Lower zones. The pit modelled on the resource has a life-of-mine strip ratio of 3.9:1.

Ore from the Upper zone is generally low-acid consuming and will be processed using whole-ore leaching technology. With the deeper ore being high-acid consuming, processing plans call for flotation concentrate leaching to produce a copper oxide concentrate that will then be fed into the standard solvent extraction- electrowinning plant.

Metallurgical recoveries of about 84% are projected over the life of mine.

As it moves forward with its feasibility study (expected by the third quarter), Barytex says it wants to further fine-tune economics — improving cost, schedule and production figures.

Shituru is located near the city of Likasi with access to power and water infrastructure. Barytex is earning a 65% indirect interest in the project through an option deal that allows it to earn up to 86.67% in the project from private company East China Capital Holdings. East China’s sole asset is an option to acquire a 75% interest in the deposit from Congolese state-owned miner Gnrale des Carrires et des Mines.

With its stock recently trading at around 60 and with 40.6 million shares outstanding, Barytex posts a $24-million market capitalization. The company has a 52-week trading range of 60-$2.30.