Now have the HighGrade report as below, Cheers V
You don't suppose ...
By Staff reporter, 5 May 2008
STORING too much faith in a report by Martin Place Securities (MPS) on CuDeco Ltd and its Rocklands copper project might be a tad risky judging by some of the queries being flagged by outsiders familiar with affairs in north Queensland.
The bullish MPS report, which among other things claims Rocklands as “one of the most important base metal mineral discoveries of the past 20 years”, estimates a two-million-tonnes-per-annum mining and processing operation would have a “relatively low” capital cost of about $A100 million.
“Access to main grid power, having established major highways within 5km and close mining site infrastructure will minimise capital costs,” the MPS report said, as will “low overburden and stripping ratios.”
According to an independent source – who not surprisingly didn’t want to be named – the estimate of $A100 million seems inordinately low for such an operation, with double that price tag considered more realistic. Operating costs of below A50c per pound were also queried as being someway south of what is likely to be the mark, though if CuDeco’s copper grades are indeed as MPS is estimating, then Rocklands would certainly be a low-cost operation.
MPS has modelled the copper ore to be processed as grading 3% copper for the first six years of the operation, with some 54,000t of contained copper to be produced in 2010 and 2011, and some 81,000t in the following four years when throughput is increased to 3Mtpa. About one-third of the copper produced in each of those six years will come from native copper, with Rocklands estimated by MPS to contain some 7Mt grading 5% copper – as part of a total MPS estimate of 111Mt at 1.83% copper, 0.05% cobalt and 0.23gpt gold.
Should MPS’s grade estimate prove accurate – an official JORC resource continues to be long awaited and is said to be due early in the second half of 2008 – Rocklands would have the key ingredient for it to be an outstanding project. A simple comparison highlighting just how outstanding can be seen by the project’s capital intensity per annual tonne of production.
While the rest of the copper world was told at a major industry event in Chile last month that this measure was heading on average to about $US10,500/t – with projects that averaged $US7000-8000/t were said to be doing very well – Rocklands’ $US100 million capital cost and 54,000t of copper production means a capital intensity of just $US1800/t. In other words, a little over one-tenth of the global average.
With the MPS-forecasted grade of 3% being about five-times the global average, part of that notional difference is explained. So again, the official Rocklands resource will be telling.
Another question mark placed on the MPS report relates to the production start-up date.
“MPS expects CuDeco to finalise its definitive feasibility study by June this year which includes completion of a native title agreement, approval of a mining lease after the environmental impact assessment and completion of the project engineering design,” the broker said. “Earthworks and pre-stripping of the mine pit will be required and this can commence early third quarter this year until completion close to February 2009 when open pit mining will commence.”
That MPS timeline is fanciful according to a third party familiar with the regulatory and operating environment in Queensland.
Time, as they say, will reveal all.