kennas said:Definately for the bottom draw now. Upside would be from the drilling program around Tampakan indicating the area to have even more of the resource, and recovery of copper price (unlikely) and gold (likely). Seems clear Xstrata may be preoccupied with other projects and intigration to have the resources, time and available talent to bed this down as well. I'll look at it again next July...
Xstrata to fund Tampakan
Barry Fitzgerald
November 2, 2006
Other related coverage
XSTRATA is to pick up the running on the Tampakan copper/gold project in the southern Philippines after the project emerged from a pre-feasibility study sporting world-class credentials, with a matching capital and infrastructure cost of $US1.9 billion ($A2.48 billion) to boot.
Under an option agreement covering a 62.5 per cent interest in Tampakan with Melbourne-based Indophil and Filipino interests, Xstrata has decided to sole fund ”” at more than $2 million a month ”” further work ahead of a final option exercise decision before December next year.
The decision to sole fund for an extension of the option period rather than an immediate exercise of the option at a bargain $50 million did not surprise the market as Xstrata is busy integrating the nickel and copper assets it acquired on its recent acquisition of Canada's Falconbridge.
Should Xstrata eventually exercise the option as expected, Indophil would be left with a 32.5 per cent interest and Alsons Corp with 5 per cent. Tampakan contains 11.6 million tonnes of copper and 14.6 million ounces of gold, plus molybdenum.
But developing Tampakan as an annual producer of more than 210,000 tonnes of copper and 218,000 ounces of gold will not come cheap, with initial capital cost estimates of more than $US800 million falling victim to the industry-wide surge in costs.
Tampakan's forecast cost is split into $US1.4 billion in direct capital costs and $US500 million in other infrastructure costs at the remote site, with the latter potentially to be undertaken by third parties.
Cash operating costs are estimated at less than US70 ¢ a pound of copper after gold credits. This compares with current spot prices for copper of $US3.30 a pound.
Indophil managing director Tony Robbins said that since completing the pre-feasibility study a month ago, the work program had continued unabated. "We remain on schedule," he said.
The capital cost increase spooked some in the market, with Indophil shares weakening 2 ¢ to 76.5 ¢.
Xstrata executive general manager of project development (copper) Peter Forrestal said the PFS confirmed Tampakan as a major undeveloped copper/gold deposit.
ahhh too bad there was a wedge and pennant forming as well. Good news would have increased the SP.
