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Central Asia Metals (LON:CAML) said it is investing a further US$3mln in Chile-focused company Copper Bay as it completed a pre-feasibility study on the latter’s Chañaral tailing project.
In doing so CAML will increase its holding in Copper Bay to 75%. The money will be used to complete a feasibility study on the asset, which is on a beach, 1,000 kilometres north of country’s capital Santiago.
A total of 1,246 holes were drilled on the tailings as CAML compiled a resource of 104,345 tonnes of copper in the higher confidence indicated category with a further 20,000 tonnes inferred.
A portion of the inferred resource will be used to create a 50 metre wide buffer to protect the majority of the tailings from the sea.
The estimated capital investment required to build a mine at Chañaral is put at US$88mln, while the cash costs of production are put at US$1.34 a pound, or half the current spot price.
Metallurgical tests have suggested the most effective means of extracting the copper from the tailings is by initial acid leach.
This will produce copper cathode that will be further processed using a method called froth flotation to produce a clean concentrate. Recoveries are put at almost 72%.
Output is expected to be 8,600 tonnes of copper a year and the mine life is put at nine years.
CAML owns and runs the Kounrad mine in Kazakhstan, which produced 11,136 tonnes of the metal last year and is expecting to raise output to 15,000 by the end of 2016.
The operation is one of the most efficient in the world with the cost before shipping and royalties of less than 40 cents a pound, while the all-in figure is 71 cents.
Referring to the company’s plans in Chile, chief executive Nick Clarke told investors: "This investment represents CAML's first step towards generating a robust project pipeline which gives the company the opportunity to grow and to build upon our success at Kounrad.
“Moreover, this investment reinforces our presence in an attractive copper mining district where we will continue to focus on business development opportunities.
“We will be seeking opportunities to optimise the project over the course of the feasibility study and are encouraged by the upside for resource development in the surf and bay zones."
The shares, up 12% in the last year, marked time at 184.75p. FinnCap reckons the stock is worth 286p.
Martin Potts, the broker’s mining analyst, said of today’s announcement: “For Central Asia Metals, this is to an extent about country risk diversification, although the high profit margins make it an attractive project in its own right.”