Tiger into high-grade Kipoi copper in DRC

Tiger Resources (TGS-T, TGS-A) has a firmer grasp of the economics of its copper-rich Kipoi deposit in the Democratic Republic of the Congo (DRC). Now it must wait to see how firm its grip is on the rights to the project.

In accordance with the government’s stated wish to have feasibility studies on projects completed promptly, with production following soon afterwards, Tiger finished a definitive feasibility study on the first stage of Kipoi’s development.

The company is in the process of acquiring a 60% interest in the project, owned by SEK, a 60-40 joint venture between Congo Minerals and state-owned Gcamines. Aussie-based Tiger is taking over Congo Minerals for its majority stake.

However, the Kipoi contract is being reviewed as part of the DRC government’s wider review of mining contracts launched last year.

Tiger says negotiations associated with that review are at an advanced stage, and expects things to be formalized soon without any significant changes to existing contractual terms.

The government has made it clear in its review that Gcamines is to play an active role in the development of the mine, rather than be a silent partner.

The feasibility study focused on Kipoi Central, one of five deposits within a 12-km-long fragmented sequence of mineralized roan sediments.

A resource update there put total measured and indicated resources at 2.9 million tonnes grading 8.1% copper for 232,000 tonnes of contained copper metal.

Financials in the study were based on throughput of 900,000 tonnes per year with a head grade of 7% copper over a three-year period to produce 95,000 tonnes of copper metal. A copper price of US$2.50 per lb. was used.

Capital costs are estimated at US$59 million, cash costs per lb. copper came in at US$1.20, and projected cash flow is estimated at US$138 million.

Costs are mitigated, Tiger says, by existing infrastructure already in place at Kipoi. This includes paved roads to Lubumbashi — the capital of Katanga province — as well as railway and high-voltage power lines running through the project and the ready availability of water.

The project’s net present value with a 10% discount rate is US$58 million with an internal rate of return (IRR) of 51% after taxes and royalties. The payback period for investment is estimated at just 1.5 years.

“The exceptional high-grade resource at Kipoi Central should ensure the company can develop a robust project, with an internal rate of return of more than fifty per cent, capable of generating positive cash flow under varying economic scenarios and will provide a strong platform for the growth of Tiger into a 100,000- tonne-per-year copper producer,” said Tiger’s managing director David Young in a statement.

To get to that robust figure, Tiger plans to develop Kipoi in two stages.

First it would build a short-duration pyrometallurgical plant to recover 25,000 to 30,000 tonnes per year of black copper from high-grade oxide ores.

Then, for its second stage, it would move the operation into a solvent extraction and electrowinning (SX-EW) plant with similar capacity to treat the bulk of the oxide ores.

The company already completed a feasibility study on the two stages last year, but this most recent study, which is labelled a “definitive” feasibility study, looked at stage one more closely.

And while Kipoi has copper resources grading 3%, they were ignored in the study, which instead focused only on ore in the central area grading higher than 3.25% copper.

The crushing circuit would have a feed rate of 900,000 tonnes per year to produce roughly 120,000 tonnes per year of 25% copper concentrate.

Tiger plans to build two shaft furnaces alongside a heavy media separation plant to turn out such numbers. It says construction would take one year with the company aiming to be in production by the end of 2009.

The company is looking at debt and convertible debt to fund development and wants to have finances in place by year’s end.