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  • Tiger Resources Establishes Kipoi Copper Production At Low Cost 0 comments
    Jan 13, 2014 7:23 PM

    Tiger Resources (ASX: TGS) has underlined how attractive the metrics of its Kipoi Copper Project in the Democratic Republic of Congo are, achieving production of 41,255 tonnes of copper-in concentrate in 2013, projecting a cash cost of just $0.30 per pound in 2014.

    This is more than 4,000t higher than its original guidance of 37,000t that it had estimated from its Stage 1 heavy media separation plant.

    Now the forecast for the Kipoi HMS plant for 2014 is for it to produce 39,000t of copper at a cash cost of $0.30 per pound of copper.

    This compares to the current copper spot price of about $3.328 and is a clear indicator of its status as among the lowest cost, highest grade producers in the world.

    "For the plant to achieve our updated production guidance of more than 41,000 tonnes - exceeding our initial guidance by more than 4,000 tonnes - is extremely satisfying and is testament to the commitment of our staff on the ground as well as our management team," managing director Brad Marwood said.

    "The HMS has been operating well above nameplate capacity for most of 2013."

    Further production will come from the Stage 2 solvent-extraction electro-winning (SXEW) plant that is on schedule to start production of copper cathode in the second quarter of 2014.

    The company plans to produce 25,000t of copper cathode in the first full 12 months of production at the SXEW plant, and 50,000t per year from then on.

    Full production and operating costs from Kipoi will be detailed in its December Quarterly Activities Report to be released later this month.

    Kipoi Copper Project

    The Kipoi Project covers an area of 55 square kilometres and is located 75 kilometres north-northwest of the city of Lubumbashi in the Katanga Province of the DRC.

    It contains a 12 kilometre sequence of mineralised Roan sediments that host at least five known deposits: Kipoi Central, Kipoi North, Kileba, Judeira and Kaminafitwe.

    Kipoi Central, which contains a zone of high grade copper mineralisation within a much larger, lower grade global resource, is the principal deposit with 642,000t of copper.

    An updated Reserve estimation at Kipoi Central is expected to be announced early this year.

    Overall Resources at Kipoi are 934,000t of copper.

    Heap leach commissioning at the SXEW processing plant was completed on 27 December 2013 and the expansion is on track to start copper cathode production in the second quarter of 2014.

    The heap leach will continue to build copper-in-solution for feed to the solvent-extraction circuit with more than 90% recoveries forecast in 120 days.

    An updated Reserve estimation at Kipoi Central, the main deposit within Kipoi Project area, is expected to be announced early this year following the company's announcement on 13 December 2013 that it had increased the Resource to 642,000 tonnes of copper.

    Analysis

    Tiger Resources has highlighted the strong margins it expects to receive from the Stage 1 heavy media separation plant at its Kipoi Copper Project with the forecast of 39,000t of copper in 2014 at a cash cost of $0.30 per pound of copper.

    Ultimately, the investment case of commodity producers turns on its fundamentals. With Kipoi's high grades of copper (7% Cu) and low cost per pound (HMS) and high margins, Tiger Resources has it in spades.

    Stage 2 site cash operating costs are forecast at $0.72/lb for the first two years of the operation with no mining required, still highly conducive to high profit margins.

    With the current copper spot price of about $3.328 we believe that Tiger Resources will draw corporate interest, especially from Chinese or Asian and minerals groups that are actively seeking copper production with low quartile operating costs, high margins and long project life.

    It also underscores just how much there is to look forward to for the company this year.

    Share price catalysts include:

    - The updated Reserve estimate for Kipoi Central
    - Start-up of production from the Stage 2 SXEW plant

    On our valuation, Proactive Investors imputes a share price target for Tiger Resources at between A$0.58 to A$0.76 per share.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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