Stronger metal prices lift NPV of Copper Mountain’s Eva project in Australia to US$622M

Copper Mountain Mining (TSX: CMMC; ASX: C6C) has updated the economics for its Eva copper project, finding healthier economics thanks to higher metals prices, but also a higher capital commitment.

When the Eva feasibility study was released in May 2020, the development capex was estimated to be A$705 million (US$502.2 million), but that number has risen 18.7% to A$836 million (US$596 million).

Meanwhile, the long-term copper price used in the latest update is US$3.39 per lb., up 12% compared to the 2020 feasibility study, and the gold price of US$1,598 per oz. is up 17%. 

“The current inflationary environment prevalent globally, particularly for some material and labour supply in Queensland Australia, has resulted in some project capital cost escalation,” Copper Mountain president and CEO Gil Clausen stated in a release. “We believe this impact will ease as the local economy opens fully after Covid-19 restrictions lift, materials flow regularly, and labour pressures relax over the next six to 12 months.”

The Eva copper project now has an after-tax net present value at an 8% discount of US$622 million (up 42%) and an internal rate of return of 35% (up from 29%).

“We will fund the expenditures for moving the project through detailed engineering and to secure long lead items with current cash on hand,” Clausen said.  Development is expected to be funded through conventional bank project debt financing and internal cash flow, with the project financing process expected to close in mid- 2022.  

“We are excited to formally advance Eva, which is expected to add over 100 million pounds of copper production per year, given the ever increasing and important role copper will play in a green economy and the limited number of other copper projects currently in development globally,” Clausen said.

The board has formally approved the project, subject to the 80% completion of advanced detailed engineering, committed project financing and the lifting of Covid-19 restrictions in Queensland.

All the technical details outlined in the feasibility study remain unchanged. Eva will be a conventional open pit and crushing-grinding-flotation concentrator. The commissioning is expected in late 2024.

The Eva deposit is an iron oxide copper gold (IOCG) type with an expected mine life of 15 years. Annual output will average about 100 million lb. of copper and 14,000 oz. of gold in copper concentrate. Proven and probable reserves total 171 million tonnes grading 0.46% copper and 0.04 gram gold per tonne for 1.7 billion lb. of copper and 260,000 oz. of gold.

The resources include 260.7 million measured and indicated tonnes at 0.42% copper and 0.04 gram gold per tonne. The inferred portion is 26.3 million tonnes at the same grades.

There are seven pits planned at Eva, with Little Eva being the primary pit. The mine plan includes the mining of 551 million tonnes of mineralized material and waste from the deposits with an average waste-to-ore strip ratio of 2.2:1.

The concentrator will have a throughput of 31,200 tonnes pe day or 11.4 million tonnes annually. Material from the pits will be blended to contain about 75% sulphide ore and 25% native copper ore. The flowsheet includes crushing, grinding, gravity separation and flotation. The concentrate will be shipped 95 km to Glencore‘s (NYSE: GLEN) Mt. Isa smelter.