LONDON (ShareCast) - (Sharecast News) - Copper-gold exploration and development company Bezant Resources updated the market on the results of an independent study assessing the optimisation of potential future mine development for its Mankayan copper-gold project, located on the Island of Luzon in the Philippines, on Tuesday.
The AIM-traded firm said the study was undertaken by independent consultants Mining Plus, using prevailing market conditions premised on the Snowden Mining Industry resource estimate prepared in 2009 under JORC 2004, which defined an indicated resource of 1.1 million tonnes of contained copper and 3.7 million ounces of contained gold, and an inferred resource of 0.2 million tonnes of contained copper and 0.6 million ounces of contained gold.

It said the highlights of the study included the exploration of alternative routes to production, with the Mankayan copper-gold porphyry reportedly supporting different "robust routes" for potential future development.

Those included, for the first time, a sub-level caving (SLC) 'stepping stone' scenario, with two main block caving (BC) routes identified for progression, from a total of 11 scenarios assessed, with both supporting an average production grade in excess of 0.64% copper equivalent.

It also revealed a five-year lead time to production, with the study finding that under all four of the representative options selected for further analysis, the time to initial production was approximately five years.

The first five years of production would be sequenced, according to the study, in order to deliver production from the higher grade areas of the deposit, in some cases demonstrating average grades achievable of up to 0.77% copper equivalent during that initial period.

For the first time, Bezant said off-site costs for concentrate handling and smelting were incorporated into the project's economics as part of the study, to more accurately demonstrate development viability.

The study had built and improved upon the historic 2014 scoping study update, following analysis of the key inputs and characteristics further to the firm's review of the project during 2018, providing Bezant with updated analysis.

Bezant said it had two preferred BC scenarios - the first being the so-called 'option 4', which would provide a medium production rate with lower start-up costs than those associated with higher production rate models.

That option carried a $1.18bn net present value, total revenue of $11.65bn, an average cost of $19.1 per tonne, a 27% internal rate of return before tax and royalty, and start-up capital expenditure of $896m.

The other BC scenario was 'option 8', which carried lower start-up costs, coupled with a good overall project value maintained by ramping-up the production rate after the first footprint.

Its net present value was $797m, with total revenue of US$11.47bn, an average cost of $19.7 per tonne, an internal rate of return of 21%, and start-up capital expenditure of $633m.

Bezant's additional preferred option was 'option 9', an SLC intermediary route, which it described as a more flexible and low start-up cost method that was determined as an intermediary step towards a full block caving scenarios.

Its start-up capital expenditure would total $529m, with a slightly reduced time to first production, a first phase period into higher grade core, and an average cost of $19.9 per tonne.

"Mankayan is a major, well delineated copper-gold porphyry style deposit and this latest Mining Plus study serves to demonstrate potential robust development options able to sustain an average mining grade above 0.64% copper equivalent at average costs below $20 per tonne," said Bezant Resources chief executive officer Laurence Read.

"This potentially highly efficient, established copper-gold source is situated on Luzon Island and accessible by tarmac road only a day's drive from Manila."

Read noted that historic studies on the project were designed to optimise the mining model without necessarily taking account of influential factors such as capital spread, the high grade core, mining rates and footprint and possible intermediary routes in order to achieve initial production from a significantly reduced capital outlay.

He said the latest study had therefore been most informative, and enabled the company's management team to plan for different potential production scenarios ranging from six million tonnes per annum to 12 million tonnes per annum, without unduly affecting financial ratios.

"The identification of a sub level caving route also provides a potential new way forward for Mankayan by way of an intermediary step towards full block caving which, when combined with new sequencing work, allows for first revenues to be achieved earlier for significantly reduced start-up capital expenditure," Read explained.

"The inclusion for the first time of estimated off-site costs in the project's economics represents an important element in assessing margins from the eventual future sales of concentrate."

Bezant's work with Mining Plus afforded the firm "great confidence" that the project lent itself to potential future development by medium size mining companies, as well as the majors, seeking to secure a long-term source of physical copper and gold, Laurence Read said.

"The board remains positive regarding the fundamentals for copper over the next three years and believes that signs of a supply shortfall are already becoming evident."

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