A newly released feasibility study for Nzuri Copper’s Kalongwe Copper-Cobalt project in the DRC shows it will generate piles of cash for the junior explorer, with revenues of US$499m, an internal rate of return of 71% and an NPV of USD$116m. The project could be generating cash just 12 months after development approval underpinning Nzuri’s big ambitions for its prime tenements in the African copper belt.
Nzuri Copper came out of a trading halt today armed with a lovely set of numbers from their long awaited feasibility study into the Kalongwe Copper-Cobalt project in the Democratic Republic of Congo.
The study shows the Stage 1 development of Nzuri’s 85%-owned project is expected to generate a whopping pre-tax internal rate of return of 71%, revenues of US$499m and a pre-tax net present value of US$116m over the initial seven-year mine life. Production could begin 12 months after finance and board approval are in place, with payback in just 21 months.
The company also announced a maiden ore reserve of 6.98Mt at 3.03% Cu and 0.36% Co for 211,494t of contained Copper and 25,128t of contained Cobalt.
With a current market cap of just $34.5m, the feasibility study numbers are clearly very significant for Nzuri.
They are a strong endorsement of Nzuri’s strategy to pursue a simple, low-cost, rapid development at Kalongwe, which is just 15 kms from Ivanhoe’s giant Kamoa and Kakula discoveries in the African copper belt.
The idea is to generate cashflow as soon as possible to help fund Nzuri’s exploration on a large package of highly prospective surrounding tenements, some of which are subject to a JV with Ivanhoe.
The strong numbers reflect a low capital cost and high Copper and Cobalt grades. Capital costs have been held down to just US$53.1 million, which includes US$10.2 million for contingencies and taxes.
The capital costs have been kept at a reasonable level by using largely off-the-shelf equipment to build a dense media separation processing plant. The C1 cash costs of production are only US$1.35 per pound of Copper, including Cobalt credits.
Nzuri Copper CEO and Executive Director Mark Arnesen said: “The results of this high-quality Feasibility Study show that Kalongwe is an outstanding project, characterised by high copper and cobalt grades, low capital and operating costs and strong financial returns. The relative simplicity of the Stage 1 project and anticipated 12-month timeline to production, once funding and board approvals are secured, make this a very attractive foundation project for Nzuri.”
“In addition, the FS highlights the significant upside that can be unlocked through future project expansions, including the potential for leaching of cobalt-only ore and mineralised rejects, potential off-take to some of the closer new SX-EW plants now under construction in the region, and the enormous exploration upside both in the immediate Kalongwe Licence and regionally within our Fold Thrust Belt JV.”
Nzuri reported they were already well advanced in negotiations for funding, which could include off-take funding, equity investments by strategic partners and conventional debt funding.
Given the strong economics of Kalongwe and its address in one of the world’s hottest Copper-Cobalt exploration districts, Nzuri now look well placed with a project that can make real money quickly and a lot of blue sky left over from exploration in what is a world class region.