Constructive Dialogue: Copper M&A the Cupboard is Nearly Bare, page-87

‘Copper Projects Review 2021’ is the second follow-up report to RFC Ambrian's original copper report entitled ‘Copper M&A – The Cupboard is Nearly Bare’, published during November 2018.



In this second update RFC Ambrian once again reviews recent copper M&A activity, examines the key issues facing the development of new copper mines, and looks closely at copper exploration projects where future M&A activity could take place.

RFC Ambrian originally selected 3.0Mt of contained copper as a cut-off for resource size as it calculated that this that might allow the construction of an 80-100kt/y operation for a 20-year mine life, depending on a number of geologic and economic factors. It believes that this is the smallest size of mine that may interest Tier 1 or Tier 2 copper producers to acquire or construct.

1. Figure 13 in the new RFC Ambrian report is interesting re: NPV and IRR data.

2. Two thirds of the projects have an IRR of between 10-20%. The study input copper prices averaged US$3.02/lb.

3. Very few of these projects appear to have copper reserves (see Figure 5).

4. Only three of these projects have a grade above 0.5% copper, with a weighted average grade of 0.345% copper (excluding by-products).


Note: While the Kalkaroo open pit copper-gold project has never been considered a Tier 1 or Tier 2 asset, based on the original PFS dated 18 June 2019 it does have a NPV7.5% of A$564 million and an IRR pre-tax of 26% and post-tax 21% (based on lower long-term consensus prices of US$2.89/lb copper and US$1,200/oz gold, at A$:US$0.75). The Kalkaroo copper Ore Reserve grade is currently 0.47%.


The [Havilah] Board remains committed to maximising returns to shareholders through judicious management of the Group’s multi-commodity mineral portfolio in South Australia. The Board’s strategy is to maximise the fair value of the Group’s mineral portfolio either by production, sale or farm-out with suitable well-funded partners. The Board will not entertain any proposal that, in its view, does not assist Havilah to reach this goal. [Havilah 2021 Annual Report, page 4 if you missed it]

Cheers

These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.


P.S. @haripin
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