Central Asia Metals' Kazakhstan plant will be completed on time and on budget
Central Asia Metals (LON:CAML) said this morning that its copper plant at Kounrad in Kazakhstan will be completed on time in December and within the planned budget of US$47 million.
So far the company has spent almost US$29 million on the solvent-extraction electrowinning facility (SX-EW) which will process around 10,000 tonnes of copper cathode a year.
Plant, equipment, structural steel and panelling have all now been fully manufactured and are in the process of being delivered to the site, the company said in its interim results statement.
A rail spur is already in place, as are the solution ponds and boiler-house foundations.
Located over 600 kilometres north of Kazakhstan’s largest city, Almaty, the Kounrad site is a vast waste dump with accumulations of rubble, rock and dust amassed from 70 years of open-pit copper mining.
The two-stage SX-EW process being employed by CAML extracts and upgrades copper ions from a low grade leach solution that has been run through these dumps of waste material.
The end product is an incredibly pure copper cathode that is garnered from industrial baths full of the concentrated electrolyte.
It is a process used by some of the major Chilean miners to shave a few million quid off the costs of production.
CAML is one of the few companies to base its entire business model around what is an incredibly simple, and of course cheap, means of liberating copper.
In fact the costs are right there at the bottom of the curve at around 40 cents per pound, which compares very favourably with a spot price of somewhere north of US$4.
CAML has for the past three years been running a test facility that churns out 600 kilograms of copper of a day.
This pilot plant has now been moved and has been testing the sulphide dumps since July.
The company said this morning that exploration on the Kounrad dumps has begun to compile a JORC compliant resource by the end of next year.
Meanwhile negotiations are at an advanced stage for a copper off-take deal that will provide some much-needed income which will kick in from next year.
The loss for the six months to June 30 narrowed to US$1.8 million from US$4.9 million previously.
Chief executive Nick Clarke said: “"This has been a productive period for the company and I am extremely pleased with the progress made at Kounrad, where we are targeting completion of construction by the end of 2011. “We have consistently remained on track to deliver the 10,000 tonne per annum SX-EW facility on budget.
“The focus of management continues to be on Kazakhstan where commissioning of Kounrad will commence during in the first quarter of 2012 and we anticipate that within six months the SX-EW plant will be up to full production of 10,000 tonnes per annum of copper cathode.
“We expect to complete negotiations for the sale of copper cathode from Kounrad via an off-take contract, which will provide a source of cash flow for the company from 2012 onwards."
CAML owns 60 per cent of Kounrad, giving the Kazakhstan authorities a free carry on the remaining 40 per cent right the way through to production.
There is after that the opportunity to earn back the capital costs, which means the income split is likely to be 80-20 for the first couple of years at least.
The company also owns Alag Bayan, a 40 square kilometre property situated in the middle of Mongolia’s prolific copper-gold porphyry trend.
It is around 100 kilometres from the world class OyuTolgoi deposit being developed by Ivanhoe Mines, Rio Tinto and the Mongolian government – so the neighbourhood is a good one.
It has drilled three holes here and the resultant assays returned only low trace amounts of copper with no economic mineralisation intercepted.
Elsewhere in Mongolia it has the Handgait molybdenum project, which has a JORC resource of almost 42,000 tonnes, and the Ereen gold property, which has a non-too-shabby 750,000 ounces of the precious metal.
The latter is likely to be sold at some point in the very near future, Clarke revealed recently.
“We’d rather monetise this and look at other things. It is being held for sale. There is the potential for it to be a 1 million ounce-plus (deposit).”