Mawson West releases Kapulo feasibility study

Vancouver – Despite only listing on the TSX in March, Mawson West (MWE-T) has already released a feasibility study on the Kapulo target at its Dikulushi concessions thanks to previous work as an Australian-listed and unlisted company.

Mawson West actually began working on part of the Dikulushi property in the Democratic Republic of Congo as far back as 2006 as an earn-in agreement with Anvil Mining (AVM-T), but ended up buying the entire 7,500-sq.-km Dikulushi Mining Convention in April 2010.

In between, the company delisted from the Australian stock exchange in mid-2009 and advanced the project while a public but unlisted company, with Anvil its single biggest shareholder. Mawson West then debuted earlier this year on the TSX with a $60-million initial public offering, though it is still Australia based and Anvil is still its largest shareholder.

The feasibility study deals specifically with the Kapulo project on the northeast corner of the company’s tenure, which sits in the southeast corner of the country. The Dikulushi Convention that hosts Kapulo, which was established in 1998, sets out a regulatory and fiscal regime for the area, and also established that a community foundation would have a 10% stake in the project.

Based on US$2.50 per lb. copper, the feasibility study establishes proven and probable mineral reserves of 3.6 million tonnes grading 3.6% copper and 8.3 grams silver per tonne, with potential annual production of 15,800 tonnes of copper and 78,000 oz. silver over a 7.5-year open-pit mine life. Overall measured and indicated resources at Kapulo, which include the reserves, stand at 6 million tonnes grading 3.5% copper and 10 grams silver.

Capital costs for the project are estimated at US$69.5-million with the US$40.6-million cost of the processing plant by far the biggest expense. The company plans to fund development from current cash reserves, with the commissioning of the plant scheduled for November 2012. Life-of-mine operation costs are estimated at US$1.97 per lb., or US$1.79 per lb. excluding duties and taxes.

Using US$3.62 per lb. for the base case financial model, the study estimates the project could generate revenue of US$735-million and pre-tax operating cash flow of US$305-million. The net present value, using a 10% discount rate, then comes in at US$157-million with an internal rate of return of 61% and a payback of under 2 years.

Mawson West is currently working on converting its exploration permit on Kapulo into an exploitation permit that would allow mining, with environmental and social studies already submitted to the government and waiting approval.

Along with Kapulo, Mawson West owns the Dikulushi mine where it is processing a dwindling stockpile of 1.2% copper. The operation, 135 km southwest of Kapulo and previously operated by Anvil, recovers about 400 tonnes of copper and 35,000 oz. silver per month from the stockpile that is expected to run out in October.

The company, however, recently completed an internal feasibility study on exploiting the remaining known resource at Dikulushi and a similar independent study is underway. The company is also looking at the possibilities of developing a deposit 15 km from the mine.

Along with its actual IPO of 30 million shares at $2 in March, the company raised an additional $60 million by satisfying the conditions of 120 million subscription receipts issued in December and January at 50¢ each. The receipts were converted into 30 million shares thanks to a 1:4 share consolidation. Mawson West now has 142.6 million shares outstanding.

Mawson West’s share price rose 8¢ or 6.7% to $1.28 on the latest news, though it also hit a trading low of $1.09 during the day.