Sulphur Springs feasibility study confirms long-life, high-margin Australian copper-zinc mine with outstanding economics
Wednesday, October 10, 2018 - 8:55:17 PM

According to Mining News Pro -Venturex Resources’ Board has endorsed the DFS for the base case, 1.25 Mt/y development of the 100%-owned Sulphur Springs copper-zinc project in the Pilbara region of Western Australia based on new Ore Reserves, with key life-of-mine outcomes including project revenue of A$2,625 million, free cashflow (pre-tax real) of A$818 million, pre-production processing plant and infrastructure capital of A$146 million, pre-tax NPV8% of A$472 million, IRR (pre-tax) 51% and average annual pre-tax cashflow of ~A$80 million. Positive DFS on 1.25 Mt/y base case project paves way for financing and development of one of the few new mid-tier base metal projects in Australia.

  • Average annual production of approximately 65,000 t/y of ~25% Cu concentrate (~15,000 t/y copper payable metal) and 75,000 t/y ~50% Zn concentrate (~35,000 t/y zinc payable metal)
  • Life-of-mine payable metal of 146,000 t of copper and 348,000 t of zinc
  • Increased Ore Reserve of 8.5 Mt @ 1.4% Cu and 3.1% Zn (up from 7.3 Mt @ 1.2% Cu and 3.5% Zn), representing a 42% increase in contained copper metal
  • Life-of-mine mine inventory of 12.6 Mt @ 1.4% Cu and 3.6% Zn (inclusive of Reserves and Inferred Resources)
  • Mine life of 10.3 years (post construction) averaging ~A$80 million per year of free cashflow
  • Upfront Capital requirement of A$169 million including A$146 million for a 1.25 Mt/y processing plant and other site infrastructure (which represents a significant capital cost decrease from the Feb 2017 Value Engineering Study (VES) of A$167 million for a 1 Mt/y processing plant and related infrastructure); A$23 million for other pre-production costs including site access and pre-strip mining
  • Significant improvement in project economics compared with the 2017 VES utilising a conservative discount rate of 8%
  • Pre-tax NPV8% of A$472 million (Feb 2017 VES: A$338 million) and Pre-Tax IRR of (51%)
  • At consensus commodity prices, pre-tax NPV8% increases by 31% to A$617 million
  • Post-tax NPV8% of A$310 million and post-tax IRR of 39% (project level)
  • Excellent exposure to strengthening copper and zinc prices
  • Further opportunities to add value through exploration and increasing plant capacity
  • The Board is very confident in achieving finance solutions to develop Sulphur Springs due to the robust nature of the project economics.

Venturex Resources Managing Director, AJ Saverimutto, said the delivery of the Sulphur Springs DFS puts the company firmly on track to become Australia’s next mid-tier copper-zinc producer.

“What stands out from the vast amount of work completed as part of the DFS is that Sulphur Springs is a high-quality, long-life project that will generate robust margins and strong financial returns, even using relatively conservative long-term metal price assumptions,” he said.

“The DFS results show a significant improvement in several key areas compared with the Value Engineering Study completed last year, including a 40% increase in the project’s Net Present Value to A$472 million, an increased Reserve, increased payable copper and zinc production and a pre-tax Internal Rate of Return of 51%. At current spot prices, the NPV is in excess of half a billion dollars – a fantastic result which really underlines the scale and quality of the project.

“Importantly, we have also managed to cut the pre-production processing plant and infrastructure capital cost estimate to A$146 million, while more accurately quantifying all capital and operating costs, refining the open pit and underground mine plan and completing all metallurgical test work to a very high level of accuracy.

“This is a project which is well and truly ready to go. It’s a straightforward development and mining proposition. It’s located in a Tier-1 mining district, close to major iron ore and lithium operations and first-rate infrastructure. Also, the permitting process for the reconfigured open pit and underground development is now in its final stages.

“With the DFS now complete, we are confident that we will be able to move rapidly to secure an appropriate project finance package supported by strategic off-take arrangements that will allow us to start development in the near term.

“Importantly, the commodity price assumptions used in the DFS are conservative compared to market fundamentals and below current spot prices. They are also quite conservative in comparison to the average price decks used by the major institutions. With this in mind, there is huge upside to this project from improving copper and zinc prices in the years ahead – a view which is increasingly held by many analysts – as well as from exploration success as we begin to unlock the potential of the 27 km long Panorama VMS trend.”,-high-margin-Australian-copper-zinc-mine-with-outstanding-economics
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