New Century Resources Ltd (ASX:NCZ) is one step closer to reviving a low-cost, long-life copper-gold hub thanks to a new pre-feasibility study (PFS).
The resources stock is considering a restart at Tasmania’s Mt Lyell copper mine, where it believes it can generate 555,000 tonnes of copper and 320,000 ounces of gold-in-concentrate over a 25-year mine life.
Today, New Century set a course for production in a pivotal PFS, reporting a pre-tax net present value of A$560 million and a 22% internal rate of return.
The company said strong project economics and Mt Lyell’s multi-decade mine life warranted a feasibility study, slated for completion in Q3 this year.
“Transformational opportunity”
In October 2021, New Century kicked off a two-year option agreement to evaluate a potential restart at Mt Lyell.
If it decides to exercise that option, the company will acquire Copper Mines of Tasmania, which owns the Mt Lyell project.
Managing director and CEO Robert Cooper said the PFS was “a strong validation” to add a key growth opportunity to its portfolio.
“The study clearly demonstrates that Mt Lyell is one of the largest and most attractive near-term copper projects in Australia, with projected operational metrics that compare favourably to many current operations and a resource size that allows significant scale and mine life.
“Leveraging the extensive existing infrastructure both on- and off-site, Mt Lyell has an attractive capital efficiency and a low-risk development profile.
“With an initial 25-year mine life and an overall resource base greater than 1 million tonnes of copper and almost 1 million ounces of gold, this project is transformational for our company.
“[It] represents a material long-term source of low-carbon copper to support the global transition to renewable energy and contribute to the decarbonisation of the economy.”
Production metrics
New Century’s PFS supports an initial 25-year mine life, targeting a restart of Mt Lyell’s underground mining operation.
The study estimates annual production in the first 10 years will average 27,000 tonnes of copper and 16,000 gold ounces, underpinned by an ore reserve containing 246,000 tonnes of copper and 198,000 ounces of gold.
The first decade of mine life will draw 82% of the ore from the indicated mineral resource, with an additional ~8% inferred mineral resource drilled and pending conversion to indicated status.
Show me the money
The Mt Lyell PFS indicates the project could generate A$1.08 billion in net cash flow over its initial 25-year mine life.
The restart project will need A$279 million in pre-production capital to get off the ground, while the maximum cash draw is calculated at A$360 million.
Over the first decade of steady-state operations, direct production costs are forecast to reach US$1.73 for every copper pound.
Including a production ramp-up, those direct costs increase to US$1.89 per pound over the 25-year mine life.
Focus on renewables
Cooper said Mt Lyell’s robust economics showed the project could play an integral part in the Tasmanian economy and boost employment in the West Coast region.
“Leveraging off the Tasmanian Government’s foresight to increase renewable energy generation in the state, Mt Lyell’s infrastructure and fixed assets are able to be 100% operated on zero-carbon power,” he explained.
“In a world where the embedded carbon within supply chains is becoming increasingly important, this represents a significant competitive advantage.
“Reducing the carbon intensity of our production is a key target for New Century and Mt Lyell will help to deliver this outcome.”
Where to from here?
Cooper concluded: “Building from our globally significant zinc production at the Century asset and the associated near-term Silver King development project, Mt Lyell represents a further opportunity for New Century to expand as a substantial Australian producer of base metals.
“Our project team is now progressing the Mt Lyell feasibility study, which will inform our decision on exercising the option to take ownership of the asset later in 2023.
“We look forward to updating the market on the recent drilling at Mt Lyell, which we anticipate will upgrade more material within the mineral resource and further build on what are already very substantial copper ore reserves.”