MOD Resources Limited (ASX: MOD) is an exploration and development company with an objective of becoming a substantial copper producer. MOD Resources holds 70% of the Metal Capital Exploration Limited, a UK incorporated joint venture company, with Metal Tiger Plc, owning remaining 30%.
The company today, on 28 March 2019, announced the results of the completed feasibility study for the T3 Copper Project. It includes a proposed 11.5-year open pit mine, 3Mtpa conventional processing plant and all associated infrastructure.
The key outcomes of the T3 Copper Project feasibility study have strong project economics, including estimated LOM revenue of US$2.3 billion and EBITDA of US$1.1 billion. The project has an estimated NPV of US$368 million (pre-tax) and an IRR of 33% as per the feasibility study. The pre-tax free cash flow from the project is US$777 million, inclusive of development capital. The project will have a payback period of 3.7 years from the start of the production and LOM all-in sustaining costs of US$1.56/lb Cu after deducting silver credits.
The ore reserve contains 342.7kt Copper and 14.6Moz Silver. The expected mine life is 11.5 years with the first production targeted during the first quarter of 2021. The project has an average open pit mine grade of 1.0% copper and 13.2g/t silver and LOM average annual production of ~28kt (61mlb) copper along with 1.1Moz silver, averaging over 30kt (66mlb) copper in the first seven years of full production.
The T3 Project has generated strong interest from global, top-tier, debt providers to fund a large part of the development capital. Formal Expressions of Interest have been received from several selected financial institutions who have already commenced preliminary due diligence and conducted site visits. A Request for Proposal will be sent to financial institutions following the release of the FS. Parallelly with the debt funding process, the company is having discussions with potential strategic partners to assist with funding the non-debt component of the T3 Copper Project.
The Managing Director of the company, Julian Hanna said that the company is pleased to deliver the outstanding results of the T3 Copper Project feasibility study. The strong economics demonstrate the value of this high-quality asset located within the excellent mining and investment jurisdiction of Botswana.
There are several outstanding operational and financial outcomes of the feasibility study, and several of them stand out when compared to other emerging global copper developers and producers. The T3 Project represents a relatively straightforward open pit mine and processing plant, requiring moderate capital expenditure to bring it into the production. Also due to favourable metallurgical characteristics of the orebody, the feasibility study has demonstrated that even at copper prices much lower than today’s spot price, the T3 Copper Project is expected to generate excellent returns.
On the price-performance front, the stock of MOD Resources Limited is trading at $0.350, an increase of 12.90% during the day’s trade, with a market capitalization of $94.14 million (At market close). The stock has generated a YTD return of 25.80% and generated returns of -19.36%, 28.37% and -8.82% over the past six, three and one-month periods, respectively. Its 52-week high price stands at $0.532 and 52-week low price of $0.207 with an average trading volume of 536,330.
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