Tiger Resources (ASX: TGS) is letting the numbers do the talking at its 60%-owned Kipoi Copper Project in the Democratic Republic of Congo with a 100% increase in NPV to US$755 million for the Stage 2 solvent extraction electro-winning (SXEW) operation.
This follows the recent 112% increase in estimated Ore Reserve for the Kipoi Central Stage 2 open pit to 30.14 million tonnes at 1.31% copper.
Other highlights include:
- A 41% increase in copper cathode production to 532,000 tonnes;
- After-tax internal rate of return (NYSE:IRR) of 107%, up 143%;
- Life of mine cash operating costs of US$1.04 per pound, down 8.7%;
- Cash operating costs unchanged at US$0.72 per pound during the first two years of production; and
- Mine life extended two years to 11.
The reduction in LOM cash operating costs is attributable to a reduction in mining costs from the Kipoi Central Stage 2 open pit mine, following a 10% increase in the copper reserve grade and a 33% reduction in the stripping ratio.
The SXEW plant is on schedule to commence production of copper cathode in the second quarter of 2014. It is expected to produce 25,000 tonnes of copper cathode in its first full 12 months of operation and 50,000 tonnes per annum in subsequent years.
"The numbers speak for themselves - Kipoi is a world-class copper project," managing director Brad Marwood said.
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.
Tiger had produced 41,255 tonnes of copper concentrate from the Stage 1 heavy media separation plant in 2013, more than 4,000 tonnes higher than the 37,000 tonnes it had forecast.
Production for 2014 is forecast at 39,000 tonnes, up 85% from the original estimate of 21,000 tonnes, with an attractive average operating cash cost of US$0.30 per pound.
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.
Shares in Tiger should trade higher today after it increased the NPV of the Stage 2 SXEW expansion by 100% to US$755 million, which further enhances the economics of an already attractive project.
The investment case is further improved by the reduction in LOM cash operating cost by 8.7% to US$1.04, which given its headline parameters for a copper price of US$3.40 a pound until 2018 and US$3 a pound thereafter, makes for excellent margins.
Add in an after tax IRR of 107% and it begins to demonstrate the underlying intrinsic value and quality of the Kipoi deposit.
As Brad Marwood opined, the numbers do indeed speak for themselves. This is one of few recent world class copper deposits. Proactive Investors believe the enhanced economics could draw corporate interest from Chinese or other Asian minerals groups keen to secure copper production with low quartile operating costs, high margins and long project life.
With the new economics, Proactive Investors believes there is little standing in the way for the share price target of between A$0.58 to A$0.76 per share to be met.
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.