Exco plan takes shape By Michael Quinn, 14 July 2008 GIVEN the likes of Ivanhoe, CuDeco and Xstrata’s ambitious underground plans at Ernest Henry, it’s fair to say the Cloncurry copper region of north western Queensland has a good quota of huster, bluster, and hyperbole. In contrast Exco Resources looks to have on its hands a rock solid, realistic and deliverable project that should come into production early next decade.
The pre-feasibility study recently completed shows Exco’s Cloncurry project costing about $A209 million and producing about 20,000 tonnes per annum of copper at total cash costs of $A1.62 per pound (after gold by-product and royalty payment considerations).
The capital cost, which includes ownership of the mine fleet, puts Cloncurry in line with the broad world benchmark of about $US10,000 per tonne of annual production capacity, while the operating costs compare to recent copper prices in the order of $US4 per pound.
“The numbers we’re coming up with do stand scrutiny,” Anderson told HighGrade. “Capital costs are consistent with every benchmark. On the operating cost side, we’re not in the lowest quartile – it’s hard to be with a project this size – but we’re not in the highest either. It’s solid. I guess for a company like ours to have our foot on a project like this is quite exciting at a time when copper prices are where they are. That is the overriding driver for companies like this … the copper price makes the project all the more compelling.”
Upside includes an increased resource estimate expected by the end of the September quarter that could support a 25% increase in output compared to a 10% increase in capital costs. Current resources total 35.8 million tonnes grading 0.93% copper and 0.25gpt gold.
Other potential Cloncurry upside includes the recovery of 500,000tpa of magnetite (at a capital cost estimated at $A10 million), cobalt and uranium.
“The by-product opportunities are very real,” Anderson said. “We’ve been having discussions with offtake parties about the cobalt and the iron ore (magnetite). And they alone have the ability to come close to doubling our NPVs (with Exco’s base case NPV being $A126.7 million). So all that upside needs to be formally captured and that will be through the detailed feasibility study and we’ll go forward with a project that at a very minimum will produce a viable copper and gold stream but will also have the potential to deliver cobalt, magnetite, and politics willing, uranium.”
A bankable feasibility is set to be completed in the first quarter of 2009, with Exco targeting first production in late 2010.
Exco was this week capitalised at about $A80 million, with the company holding about $A20 million cash.
EXS Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
