Relatively few Western Australian copper producers are positioned to cash in on a rampant copper price, which continues to head north into unchartered territory above $US4,000 a tonne ($A5,470t).
Relatively few Western Australian copper producers are positioned to cash in on a rampant copper price, which continues to head north into unchartered territory above $US4,000 a tonne ($A5,470t).
While more locals, caught unaware by a copper price that has more than doubled in less than two years, scramble to get into production, relatively little of this production will come from WA, with the majority of local companies having opted to explore in other parts of Australia and overseas.
At a time of record prices, refined copper production in Australia is forecast to increase by just 2 per cent to 486,000t in 2005-2006. Copper sales from WA actually fell 27 per cent last year to 42,900t.
The three major contributors to the forecast increase all have strong WA connections – two Perth companies in Straits Resources and Tritton Resources, in which Straits has a 58.2 per cent stake, and Newcrest’s redeveloped Telfer gold/copper mine.
Straits’ new Whim Creek mine and Newcrest’s expanded Telfer mine, both in the Pilbara and Tritton’s copper mine near Cobar in NSW, all went into production recently.
There will also be increased output from BHP Billiton’s Olympic Dam in South Australia, to be offset to some extent by lower refined output from the Nifty mine, 200 kilometres south-east of Marble Bar, owned by multinational Indian conglomerate Aditya Birla and producing about 25,000t of copper cathode (the raw material that goes into copper) a year.
Straits’ Whim Creek open-cut mine posted its first sales four months ago and is now on track to produce 10,000t of copper cathode this year, rising to between 15,000 and 17,000t in 2006 for a total 51,000t over four years.
There is significant potential to extend the project’s life through the identification and extension of known oxide ore at Whim Creek and the nearby Mons Cupri deposit.
Tritton Resources is the Australian Stock Exchange’s largest domestic pure copper producer.
The $39 million project went into production six months ago and has forecast production of 226,000t of contained copper in concentrate over 10 years.
It is a prime example of just how quickly and unexpectedly the copper price has moved.
At the end of June, the company’s hedge book (the amount of copper sold forward) amounted to 56,750t at an average of just $US2,217t – 25 per cent of Tritton’s reserves of payable copper at a little over half the current copper price.
At Telfer, Newcrest has 930,000t of copper in situ, along with 26 million ounces of gold, from which it produces about 24,630t of copper and 218,000 ounces gold a year.
The share price of Perth-based Australian/Canadian company Equinox Minerals has more than tripled since June, largely on the back of its Luminana copper project in Zambia.
A bankable feasibility study has forecast production of 125,000t/year over 18 years, with over 140,000t of copper produced in the first five years. No start-up date has yet been announced.
Takeover target Tethyan Copper has run into some significant capital cost increases on its Tanjeel project in Pakistan, where it is aiming at copper production of 45,000t/year.
Tanjeel is part of the company’s Reko Diq copper-gold complex, which has a total resource containing more than 7,000,000t of copper and 10,000,000 ounces of gold.
Re-scoping and re-optimising the project is expected to take a further three months, to be followed by the definitive engineering side of the feasibility study.
The unquantified capital costs blow-out caused Tethyan’s share price to drop nearly seven cents in the past few days, down near the 64 cents price being offered by Hong-Kong based investment bank Crosby Capital Partners.
Drilling at Fox Resources’ West Whundo prospect in the Pilbara has identified a rich copper zone it believes could contain about 19,000t of direct shipping copper ore worth about $20.5 million. Definition drilling is continuing, with a resource estimate expected by next month.
Fox produces about 240t of nickel and 140t of copper a month from its nearby Radio Hill mine, worth about $400,000 a month. Sally Malay also produces about 1,100t of copper a quarter from its mine in the Kimberley.
