Orvana Minerals (TSE:ORV) has significantly derisked its Copperwood project in Michigan, according to Stonecap Securities analyst Christos Doulis, after the company announced on Monday that it has now obtained all major permits required for the property.
In the update, the company said it is working on additional optimization studies with a focus on metallurgical testing and underground optimization, as well as an independent concentrate marketing study.
A third party review of the feasibility study, along with further geotechnical studies, have shown that the underground mining assumptions used in the study were "overly conservative", according to Orvana, which believes this will result in higher mining productivity and lower costs.
Meanwhile, initial work on the concentrate marketing study indicated that treatment and refining charges are expected to be higher than previously estimated, while transportation costs are also anticipated to be more costly. Transportation costs are now expected to be between $100-$200/tonne, depending on the location of the smelter(s), significantly higher than the $25/tonne estimated in the feasibility study.
Doulis, who left his outperform rating and $1.00 price target on Orvana intact, assumes initial production from the project in 2016.
"Given Orvana’s current balance sheet we do not believe that it can develop Copperwood without help from a partner. With the receipt of all of the major permits now complete, the asset has been significantly de-risked," he concludes.
The Toronto-headquartered precious and base metal miner's main property is the Spanish El Valle-Boinás/Carlés mine, from where it posted record gold production in its latest quarter.
Shares of Orvana were trading at 45 Canadian cents on the Toronto Stock Exchange on Tuesday.