Phoenix Copper completes new model for Empire project

North America-focussed base and precious metals explorer and producer Phoenix Copper has completed a new economic model for the Empire Mine open pit project in Idaho, it announced on Tuesday, to recover copper, zinc, gold and silver.

The AIM-traded firm described the project as a copper-led mining operation with production targeted for 2022, reporting that the updated economic model indicated “strong” cash flow and rapid payback in less than two years.

It said the life-of-mine would be 10 years, processing a total of 14.3 million tonnes measured and indicated ore at a 0.5% copper cut-off grade.

There was “considerable” opportunity to extend the life-of-mine through exploration and development, funded from project cash flows.

A two-phase processing plan would recover copper, zinc, gold and silver, with the first phase being a seven-year heap leach operation processing 2.1 million tonnes per year, producing copper and zinc from years one to seven.

The second phase would be a seven-year agitation leach operation processing ore from the first phase, producing gold and silver from years four to 10, using the “environmentally-friendly” ammonium thiosulphate reagent.

Life-of-mine revenue would be $784m, producing average annual production of 8,550 tonnes of copper, 1,970 tonnes of zinc, 17,235 ounces of gold and 680,050 ounces of silver.

Initial head grade would be 0.7% copper, with the project having a pre-production capital cost of $52.6m, and the life-of-mine copper equivalent cash operating cost coming in at $1.83 per pound.

The life-of-mine gold equivalent cash operating costs would be $1,190 per ounce, and the total life-of-mine EBITDA was pencilled in at $310m, with a post-tax cash flow of $155m.

Phoenix said the 7.5% base case net present value would be $105m on a pre-tax basis for an internal rate of return of 57%, and a post-tax value of $88m for a 47% internal rate of return.

It said that would increase to $157m pre-tax for a 77% internal rate of return and $140m post-tax for a 68% internal rate of return with growth of 10% in metal prices.

The board said the “encouraging” project economics would support debt finance to minimise dilution, adding that ongoing optimisation of the project was taking place, to improve the economics and extend the mine’s life.

“We continue to be focused on optimising and refining the project in order to submit our plan of operations for the first Phase of the project in order to commence the final stages of the production permitting process, with production still targeted for 2022,” said chief executive officer Ryan McDermott.

“Metallurgical test work and mine optimisation and engineering is ongoing, with a view to improving the project economics and extending the mine life.

“This will be achieved by processing additional existing measured and indicated resources, and by adding inferred resources to the production schedule once they have been upgraded to measured and indicated.”

McDermott said the company was also looking forward to a “rewarding” exploration season, particularly at the recently-discovered Red Star high-grade silver-lead zone at Empire, and the Navarre Creek gold property.

“The planning and scheduling of geophysical surveys and drill targeting at both these properties is underway, and we hope to be drilling on both properties this summer.

“This is an exciting time for our company and I look forward to providing shareholders with further updates as they become available.”

At 1538 GMT, shares in Phoenix Copper were down 5.81% at 40.5p.