COPPER 360 says it’s at an inflection point where high-margin copper concentrate production will shortly overtake its low-margin copper plate business, thanks to the start-up of its Rietberg underground mine.
This is a key change for the mining junior exploiting the copper rich Northern Cape – abandoned by mining big guns like Newmont and Gold Fields in the Nineties – which should see it make between R80m and R100m a month in revenue, from between R15m to R20m in copper plate production now.
“All the work’s been done and now it’s a question of bringing the ore out of the mine,” said CEO Jan Nelson in a presentation to investors on Wednesday.
Rietberg is the first of three mines that Copper 360 has close to production – the other two being the Homeep-East mine and the Jubilee open pit – that will feed into its central processing facilities at Nababeep as part of “cluster mining” model.
But, says Nelson, “there are 11 other mines besides Rietberg within a 29km radius; we have pre developed underground access and (these) multiple ore bodies will create a lot of flexibility for us”.
The grades at Rietberg are also “much higher than we anticipated from our resource estimates”, while the extraction of copper underground will come at a lower cost.
This has been pegged at about $4,600 a ton – significantly below the present copper price of about $8,700/t.
Nelson argues that the purity of Rietberg’s sulphides will lead to better recoveries from the orebody; while its experience mining copper oxides from surface have also made the miner more ‘anti-fragile’.
Persuasive
The Copper 360 story is a persuasive one if Nelson is to be believed: consider the company’s estimates that its 19,000 hectares of mining rights sit atop a total resource value of R226bn in copper sulphides, oxides, slag and tailings, at an estimated $9,000/t copper price and a rand dollar exchange rate of R18.50.
Yet you can also understand market scepticism: junior miners need to hype up their prospects to attract much-needed capital, and it certainly doesn’t help to widely miss one’s own pre-listing forecasts. In June Copper 360 announced a R129m loss for 2023, against pre-listing forecasts of a R245m profit.
It blamed power cuts and problems at its crushing plant and has since spent R35m on a generator farm, and R50m on new crushing equipment. That’s capital that should have gone to develop Rietberg, but which Nelson argues has addressed the risks in the business.
Its shares were marginally weaker on Wednesday, at R3.89, having vaulted to R5.25 each in April this year. That’s still less than half the R12.50 where the stock peaked shortly after listing in April 2023.
Copper 360, which is tightly held by management (they own 60% of the stock), and mostly shunned by institutional investors (only Investec and Coronation have bought into the story so far) was peppered with questions from its band of retail investors on Wednesday.
Why, they wanted to know, was the share price so volatile, for starters? And would Copper 360 attract “a more loyal investor?”
“When you’re a junior and start out you don’t have a lot of liquidity,” replied Nelson. “I do understand that it frustrates shareholders, but in building the revenue and with our plan to create more liquidity I’m confident this will change. We’ll get bigger institutional shareholders.”
Asked whether the miner – which has spent about R1bn developing its various plants – would need to tap shareholders for more capital, Nelson said they’d rather look at debt – which, ironically may now be more forthcoming now from banks than when it first started out.
“When you start a business banks don’t want to give you money – when you make enough money, then the banks want to lend it to you,” said Nelson.
The company “may” need “a bit more capital” – possibly for a solar and wind farm to generate power – but says the R80m to R90m earmarked on phase two at Rietberg and the completion of its modular flotation plant over the next three months will come “out of cashflow.”
Miningmx
www.miningmx.com
