Crazy Horse moves Taysan ahead with prefeasibility study

Philippines-focused Crazy Horse Resources (CZH-V) has outlined a 15-milliontonne- per-year open-pit copper operation at its Taysan project in a prefeasibility study.

The mine plan, like the November scoping study before it, splits the project into two stages rather than the original plan to have a larger, 30-million-tonneper- year mine. The switch has cut initial capital costs and improved project financials.

The study has outlined a 24- year mine life for the first stage of the project that is expected to produce 1.82 billion lbs. copper, 240,000 oz. gold, 19,000 oz. silver and 381,000 tonnes of magnetite for 2.46 billion equivalent lbs. copper over the mine’s life. The plant is expected to achieve 90% copper recoveries and produce a 24.5% copper concentrate, with gold and silver credits.

Using a US$3-per-lb. copper price and a 10% discount rate, the financials work out to a post-tax net present value (NPV) of US$512 million with a 30.4% internal rate of return (IRR), or an NPV of US$503 million and a 49.2% IRR, after factoring in expected mine financing of 65% debt and 35% equity.

The Taysan project is 100 km south of Manila by paved highway and 20 km away from the port of Batangas. The company can source labour and power from the port area, and Crazy Horse also owns a port facility there — but owes $10 million for it. The company plans to ship a concentrate of 24.5% copper with gold and silver credits, and produce magnetite as a by-product. Copper recoveries are estimated at 90%.

Initial capital costs are expected to be US$502 million, while average operating costs are projected to be US$1.68 per lb. copper for the life-of-mine, and US$1.18 per lb. copper for the first five years of operation.

The capital expenditure compares with slightly over a billion dollars for an earlier study that includes building a coal-fired power plant for the project.

The company would be mining 353 million probable reserve tonnes grading 0.27% copper, 0.11 gram gold, 0.9 gram silver and 3.4% magnetite, while high-grade starter pits have 0.39% copper, 0.17 gram gold, 1.5 grams silver and 4.2% magnetite for the first five years. The strip ratio is an anticipated 1 to 1.

There is room for mine expansion, with the project hosting 459 million measured and indicated tonnes grading 0.26% copper plus gold, silver and magnetite, and inferred resources of 509 million tonnes grading 0.18% copper and some gold, silver and magnetite.

The company reports that the deposit is a typical copper-gold porphyry hosted by several quartz-diorite intrusive bodies with a high-grade core, consisting of breccias and quartzmagnetite vein stockworks. Emplacement of the diorite and ore is controlled by regional crosscutting faults.

Geological mapping and ground geophysics indicate that exploration potential exists in the company’s land holdings to discover new deposits.

Crazy Horse states the deposit is located in an area of low-productivity agriculture with no communities, sensitive habitat or endangered animal species on the planned site.

For the 31,802 cubic metres of water needed per day, the company plans to source 75% from recycled tailings water and 25% from local freshwater sources.

As of last October the company is led by Mitchell Alland as president and CEO, who also took over the role of chairman in November. Alland is also the CEO of London AIM-listed Copper Development, which controls 11.8% of Crazy Horse’s shares.

Crazy Horse’s share price climbed 3¢, or 14.2% to 24¢ on the latest news, with 544,000 shares traded. The company has 64.5 million shares out and had $3 million in cash at the end of January.