Australian copper and gold developer, Exco Resources (ASX: EXS) has increased indicated resources at the Cloncurry Copper Project (CCP) by 22% to 28.0Mt @ 0.91% Cu & 0.25 g/t Au.
Total resources for the CCP now comprise 51.0Mt @ 0.83% Cu & 0.23 g/t Au. Exco had an aim of identifying a 25 m/t of indicated resources at CCP as the basis for the Definitive Feasibility Study (DFS).
The latest resource upgrades will also increase confidence that ongoing work will lead to the definition of a 25-30Mt mineable reserve as the basis for an operation, centred at the E1 Camp, treating 2.5 to 3Mtpa over a 10-year project life.
Early cash flow opportunities may open for Exco at CCP. Here's why.
With the increase in indicated resource, opportunities may increase for Exco to look at an Ore-Supply arrangement with Xstrata’s Ernest Henry Mine. Exco's E1 Camp mineralisation is located only 8km east of the existing Ernest Henry Mine (EHM) owned by Xstrata.
The EHM open pit mine life is nearing an end. There is an existing 11Mtpa Concentrator at EHM. Xstrata is evaluating underground potential from 2011. However, in the interim, Exco's CCP could fill Xstata's production gap. Given the increases in tonnages at CCP (with more likely), and compatible metallurgical properties of CCP ore, any agreement between Exco and Xstrata could deliver significant early cash flows to Exco.
Should this not occur, Exco has the option to for a stand-alone development of the CCP. The area and region is well serviced by infrastructure. It is likely the DFS may contemplate the establishment of a 2.5 - 3.0 Mtpa concentrator facility at the E1 Camp sustaining a 25-30Mt mineable reserve over a 10-year project life.
This option would also generate significant cash flows for Exco.
Furthe work in the DFS aims to convert further portions of the Inferred resources to Indicated and potentially Measured. As well as prioritisation of additional targets for future drilling, and finalisation of the Environmental Impact Statement and obtaining relevant project approvals.
Exco’s Cloncurry Copper Project (CCP) has been designated a “project of regional significance” for the purposes of the Water Resource. This should also assist in obtaining other relevant approvals.
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