Austral Resources (ASX:AR1) has received an influx of interest from both institutional funds and other Australia-based miners following the delivery of a robust Scoping Study at its Lady Colleen Project in Queensland.
Speaking to Mining.com.au, Austral Resources Chief Executive Officer (CEO) and Managing Director Dan Jauncey says results from the Scoping Study, which was completed by CSA Global in about 5 weeks, demonstrates potential to add an additional $91 million in cash flow over a 4-year period. The study also shows potential to extend the mine life to 2029.
As announced by the company, the production rate and mine life are expected to grow with continued resource definition and extensions – current study includes production from mineral resource of about 44,000 tonnes of copper at a cut-off grade of 0.7% Cu. Study economics reflected a pre-tax IRR of about 38% over some 5 years and pre-tax NPV of $60 million, ranging from $15 million to $94 million with a median estimated value of $55 million.
Results from the study have particularly piqued the interest of various Australian listed entities, including institutional funds and other miners, Jauncey says.
He told this news service that while the company has also been contacted by several undisclosed offshore organisations, at this early stage Austral has only engaged with the interested Australian companies.
The company is now on its way with undertaking a Prefeasibility Study (PFS) for Lady Colleen. According to the CEO, Austral could realistically expedite feasibility studies and potentially be in production by the Christmas period later this year.
He says, for one, the asset is sitting on an existing mining licence, which is within just 1km of the company’s existing infrastructure.
“Other than an EA amendment, it is really a walk-up start.”
While production by the end of 2023 remains feasible, Jauncey notes that progress, like with any mine, is not without its hurdles and timing will depend on obtaining approval from the Department of Environment and Science.
Jauncey says that the interest from external third parties, including institutional investors, adds confidence that Austral is on the right track.
“From my perspective it’s just delivering one what we said we would when we listed, which is getting into operation, starting to produce copper, and becoming operationally cash positive. This was our focus in the first component and in the background we are looking at ways and means to further add revenue streams into this organisation.
“This is a real show of the strength in the way we are heading…we have had a couple of phone calls…”
This is a real show of the strength in the way we are heading…we have had a couple of phone calls (from interested third parties). Ben Coutts our exploration manager presented at the Perth RIU exploration seminar and coincidently he presented the day the Lady Colleen results came out, which created a fair influx of interest both from institutional funds to other miners who are starting to look at opportunities.”
It’s fair to say that we are already in that process. We are probably ahead of the curve and are already well and truly down that path. We currently have our met work being tested, which is one of our biggest hold ups at the moment, getting an understanding whether the people we are talking to can in fact process our ore.
The fact that they are already processing ore that has very similar characteristics to ours is a fair assumption that that can be done.
We are starting to tick the boxes and deliver on what we said in the short, medium and long-term.”
It is believed an upcoming drill program will further support the project’s viability and validate the belief that production by year-end is possible. Drilling is expected to start in the current quarter with hopes the wet season in far north Queensland will have subsided by then.
About 91% of Lady Colleen’s mineral resource is categorised as measured and indicated. Further drilling is aimed at upgrading the remaining 9% inferred mineral resources to indicated.
“We are currently still open along strike and down dip so we have more drilling to do and hopefully I think it’s fair to say we will increase this reserve, which will only help our metrics and our viability.
“There is a bit of work to do and the guys have already got their drilling campaign ready to rock and roll”
There is a bit of work to do and the guys have already got their drilling campaign ready to rock and roll. The wet season and another storm in far north Queensland is wreaking a few havoc, but our drilling campaign for 2023 is around 23,000m, some of which is allocated to this and we hope to have a run at it with dry weather in early March. Lady Colleen has certainly got a provision in there for that, as well as some of our other exploration targets including oxides.”
Meanwhile, the CEO says the Scoping Study was conducted at a time in which copper prices were sitting at about $12,000 per tonne. Based on current prices, Lady Colleen has the potential to deliver up to $60 million to Austral’s bottom line.
The project’s payback period is expected to be 2.6 years with a copper sales price of $12,000, and C1 operating costs expected to be US$2.78 per pound.
While Austral embarks on a pathway to production, the company expects to continue its focus on the oxide potential within existing mining leases. These oxides are described as “real” in the revenue sense, however further work will be undertaken to determine if they represent an extension to the Anthill resource.
Austral Resources is an ASX-listed company located in Queensland Gulf Country, with a mission of delivering a first-class product and service that is recognised and sought-after worldwide from its portfolio of exploration and production tenements.
Images: Austral Resources Australia Ltd
