Interesting note from Evans and Partners at the end
I have attached Copper Strike’s Quarterly Report that was released today. Key points are that the Einasleigh Project Feasibility Study is on track to be released in August and that the focus has changed from early zinc-lead-silver production to early copper production. Viva la flexibility!
Drilling to upgrade the zinc-lead-silver resources has been completed and the rigs have been shifted to extending the Kaiser Bill copper resource, to be followed by drilling at the Teasdale copper prospect.
New resource figures for Chloe, Jackson and Railway Flat are being calculated as the assay information is received. In the meantime, a huge amount of drill results for both the zinc-lead and copper drilling will be made available over the coming month.
Updated three-dimensional models of all five Einasleigh area deposits can be accessed through the Copper Strike website www.copperstrike.com.au . This is a very easy and effective way of understanding the deposits in 3-D and is easy to do, although software such as JAVA may have to be downloaded (available for free from the website).
Below I have appended a research note from Cathy Moises of Evans & Partners that is based on today’s new information. I have also attached a note from earlier this month by Naji Aoukar at Tolhurst which was based on Copper Strike’s older paradigm of commencing with zinc-lead production and higher capital costs.
Tom Eadie
Managing Director
Copper Strike Limited
Level 9 - 356 Collins Street
Melbourne VIC 3000
Ph 0419 880333 or (03) 96400955
Facsimile (03) 96420698
www.copperstrike.com.au
ABN 16 108 398 983
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Note by Cathy Moises at Evans & Partners
In Copper Strike’s quarterly (released today), the company has radically changed the scope of the Einasleigh project to reflect the relatively strong price of copper and weak price of zinc, and also the impact of the rising cost of diesel power on the project. Despite this change, our valuation remains at $0.74 or roughly 3X the current share price!
Details
· Copper Strike were planning to progress the high grade zinc Chloe and Jackson projects ahead of the lower grade Kaiser Bill copper mine, but in the light of the changing metal prices, will now fast track the copper circuit (start up scheduled for 2010), and delay commencement of a zinc circuit until approximately 2012.
· In view of prohibitive diesel power costs, Copper Strike are putting in a 40km power line (from Kidston) at a cost of $15m to source long term cheap and reliable power for the project
· We estimate capex for the copper circuit (including the power) at roughly $60m, with the incremental add on of the zinc circuit at roughly $20m.
· Operating costs for the copper circuit are expected to average around $1.50/lb. costs are kept relatively low (low grade mine) through Heavy media beneficiation of 30 to 40% of the copper ore.
· Release of the feasibility study remains on track for release in August, and we would expect details on funding to be announced shortly thereafter
· Immediate focus on drilling has changed from further drilling between Chloe and Jackson, to very firmly focused on the copper resources and prospects.
Our thoughts
· Whilst remaining in the high risk phase, with financing yet to be finalised, we do feel that Copper Strike offers outstanding value at current levels. With production under 2 years away, and DFS almost finalized, we are getting to the tail end of the Einasleigh development, and the project certainly appears robust even using our $2.00/lb long term copper prices.
Cathy Moises
Senior Research Analyst
Evans & Partners Pty Ltd
32 Jolimont Terrace East Melbourne 3002
PO BOX 560 East Melbourne VIC 8002
Ph 03 9631 9842
M: 0418 335 328
Fax 03 8610 1608
www.evansandpartners.com.au
CSE Price at posting:
0.0¢ Sentiment: None Disclosure: Held
(20min delay)