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Metal Tiger roars as MOD Resources releases T3 copper project feasibility study

A feasibility study has indicated that T3 has a net present value of US$368mln and an internal rate of return of 33%

kalahari desert
Metal Tiger owns a 10.48% stake in MOD

Metal Tiger PLC (LON:MTR) pushed higher on Thursday after a feasibility study suggested the T3 copper project in Botswana’s Kalahari copper belt has a net present value of US$368mln.

T3 is 100%-owned by Australian explorer MOD Resources, in which Metal has a 10.48% stake.

READ: Metal Tiger looking forward to completion of feasibility study

Net present value is one of the most important numbers included in economic studies. Essentially, it takes the expected costs and incomes from a project and figures out what would be left over.

Anything above zero indicates that a project is forecast to be profitable.

READ: Feasibility study results in full

T3 is estimated to have a mine life of 11.5 years, during which time it would generate revenue of US$2.3bn and underlying earnings of US$1.1bn. Pre-tax cash flows are estimated at US$777mln.

That money would come from 28,000 tonnes of copper concentrate and 1.1mln ounces of silver that T3 is expected to produce every year, with first production slated for 2021.

All-in-sustaining costs are forecast at US$1.56 per pound of copper.

Assuming a copper price of US$3.08 per pound and an 8% discount rate, the feasibility study reckons T3 has a net present value of US$368mln, with an internal rate of return of 33%.

Financing discussions already underway

MOD thinks it will need US$182mln of development capital to finance the building of the mine, process plant and infrastructure.

Expressions of interest have already been received from “numerous global, top-tier debt institutions”, MOD said, with many having begun their initial site visits and due diligence.

The Aussie-listed company is also looking at securing non-debt financing from a “number of potential strategic parties”.

“We are delighted to report on the findings of the MOD Feasibility Study for the T3 Open Pit mine project in Botswana,” said Metal Tiger chief executive Michael McNeilly.

“The study demonstrates the strong project economics and a clear case towards project development with a relatively straightforward open pit mine and processing plant design.

“The feasibility study findings continue to support the exploration of the surrounding joint venture holdings with the mine and plant design having built in optionality for bringing in new satellite deposits.”

In afternoon trading, Metal Tiger shares were 3.8% higher at 1.38p.

 -- Updates share price --

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Price: 1.325 GBX

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Market Cap: £20.21 m
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