Tiger Resources upgrades Kipoi Copper Project Reserves by 37%
Tiger Resources (ASX: TGS) has upgraded Kipoi Copper Project Ore Reserves by 191,000 tonnes to 696,000 tonnes of copper despite mine depletion, with drilling which is focused on extending mine life.
The increase in the Kipoi Central Stage 2 Ore Reserve estimate is the result of additional drilling undertaken in 2013 and inclusion of primary material in the mine plan following completion of successful metallurgical test work.
The increase in the Kileba Stage 2 Ore Reserve estimate is the result of a revision in the projected long term copper price to $3.00/lb.
Tiger had in January increased Ore Reserves for the key Kipoi Central Stage 2 open pit by 112% to 208,200 tonnes of copper.
“It is pleasing to see the Kipoi Copper Project Ore Reserves increase by 191,000 tonnes to 696,000 tonnes of copper after mine depletion,” managing director Brad Marwood said.
“We will continue our focus to add additional mineral resources and ore reserves at each of the deposits across Kipoi to further extend the current 11-year mine-life of our SXEW operations.”
The Stage 2 solvent extraction electro-winning (SXEW) operation is due to start producing copper cathode in the current quarter. About 12,000 tonnes of copper cathode is expected to be produced in the 2014 calendar year.
Resource and Reserve Upgrade
Tiger had increased Resources at the Kipoi Central deposit of its 60% owned Kipoi Copper Project in the Democratic Republic of Congo by 7.5% to 690,000 tonnes of copper.
This is based on a revised cut-off grade of 0.3% copper – from the previous 0.5% copper – and reflects mining depletion to 31 December 2013.
It has also upgraded Kipoi Central Stage 1 Ore Reserve by 6% to 71,000 tonnes of copper and Kipoi Stage 2 SXEW Ore Reserves by 40% to 625,000 tonnes of copper. These include existing stockpiles.
The increase in the Kipoi Central Mineral Resource estimate is the result of additional drilling undertaken in 2013 and the inclusion of a reduced cut-off grade of 0.3% (previously 0.5%) following an update to the economic parameters of the Kipoi Central Ore Reserve estimate announced on 15 January 2014.
Tiger had also declared a maiden Judeira Resource of 6.1 million tonnes at 1.2% copper for 71,000 tonnes of contained copper in November 2013.
Meanwhile, the increase in the Kipoi Central Stage 1 Ore Reserve estimate is the result of additional grade control drilling undertaken in 2013 and the inclusion of transitional material in the mine plan.
Stockpiles of HMS rejects and run-of-mine material below a 3.25% copper cut-off grade will be used for processing in the Stage 2 SXEW and are reported as Stage 2 SXEW ore reserves.
Kipoi Copper Project
The Kipoi Project covers an area of 55 square kilometres and is located 75 kilometres north-northwest of the city of Lubumbashi in the Katanga Province of the DRC.
It contains a 12 kilometre sequence of mineralised Roan sediments that host at least five known deposits: Kipoi Central, Kipoi North, Kileba, Judeira and Kaminafitwe.
JORC Resources have been reported for Kipoi Central, Kipoi North, Kileba and Judeira.
Tiger had produced 41,255 tonnes of copper concentrate from the Stage 1 heavy media separation plant in 2013, more than 4,000 tonnes higher than the 37,000 tonnes it had forecast.
Copper concentrate production for 2014 is forecast at 39,000 tonnes, up 85% from the original estimate of 21,000 tonnes, with an attractive average operating cash cost of US$0.30 per pound.
Heap leach commissioning at the SXEW processing plant was completed on 27 December 2013 and the expansion is on track to start copper cathode production in the second quarter of 2014.
This is expected to produce 25,000 tonnes of copper cathode in its first full 12 months of operation and 50,000 tonnes per annum in subsequent years.
It is envisaged that ore from Judeira and other deposits within the Kipoi Project area, and within the nearby 100%-owned Lupoto Project, will also be processed during the Stage 2 operations, providing additional returns and increasing the ore reserves available as feedstock to the Stage 2 Kipoi SXEW plant.
Increased resources from these deposits will potentially increase the mine life and/or the annual plant throughput.
Analysis
The increase in reserves augurs well to increase mine life for the Stage 2 SXEW copper cathode operations.
It is impressive and a 7.5% increase in resources to 690,000 tonnes of copper takes into account mining depletion.
Given the company’s successes to date, there is every reason to believe that its focus on adding additional mineral resources and ore reserves at deposits across the Kipoi project will bear fruit.
This could further improve the economics of the Kipoi Stage 2 SXEW operation, which already has impressive project metrics in its favour with current estimated copper production of 532,000 tonnes, NPV of US$755 million, after-tax IRR of 107% and life of mine cash operating costs of US$1.04 per pound. The copper price rise recently is also of interest.
Tiger recently flagged a plan to pay dividends when the board is confident that the level of dividend can be sustained for at least five years along with consideration for one-off payments should also attract yield conscious investors over time.
We continue to maintain our estimate of future valuation which equates to a share price target of between A$0.58 to A$0.76 per share.
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