Scoping study results boost Caravel shares

Caravel Minerals says its Calingiri copper mine is set to be an outstanding project, based on a detailed scoping study that it believes is a best-case example of what listed companies need to prepare in order to meet current disclosure rules.

The release of Caravel’s detailed scoping study contrasts with several other companies, including Regal Resources, Adelaide Resources and Moreton Resources, that have retracted earlier announcements.

Other companies, including Energia Minerals, have referred to the positive results of scoping studies but have not released any details.

Caravel chief executive Marcel Hilmer said his company went to extra lengths to ensure it complied with ASIC’s new policy on forward looking statements.

“We decided to do a scoping study at a level that would give us the confidence to say the findings are reasonable,” Mr Hilmer told Business News.

“We were able to conclude quite categorically that we could say that.”

The scoping study concluded Caravel would need to invest $440 million to develop the copper project, located 120 kilometres north-east of Perth.

The estimated payback period was just three years.

Mr Hilmer said the detailed scoping study demonstrated Calingiri would be an outstanding WA copper project.

“Strong production rates, a long life of mine together with low capex and opex will likely deliver robust margins and cashflow,” he said in a statement.

The study estimated a life-of-mine operating cash cost of $A1.50 per pound, compared to an assumed long-term copper price of $US2.75 per pound.

Mr Hilmer said one of the key steps in the scoping study was to ensure the inputs and major assumptions were from external parties.

“We spoke at length with CSA Global, we had peer review in all the areas, really we had no doubt at a board level that we had a reasonable basis to release it,“ he said.

Another key aspect was the certainty of the copper resource.

“We’ve got an indicated and inferred resource, which is more than sufficient,” he said.

“Some scoping studies look at inferred only, or even exploration target.”

Mr Hilmer added that 97.5 per cent of its resource was in the indicated category.

He also expressed confidence Caravel could fund the development.

“Funding was the least difficult for us, because we have a tier 1 farm-in partner in First Quantum Minerals.

“We’ve had a relationship for a significant period of time, and with the potential to go to a joint venture, we felt that together we could fund it.”

First Quantum is listed on the Toronto Stock Exchange, has a market value in excess of $C6 billion, and operates six mines and is developing five projects worldwide.

Mr Hilmer previously worked for First Quantum, which owns the Ravensthorpe nickel project in Western Australia.

Caravel is preparing to commence a pre-feasibility study that is expected in the first half of next year.

The company's share price rose 4.9 cents today to 12 cents.