New Century Resources Ltd (ASX:NCZ) has executed an option agreement with Monte Cello BV, a subsidiary of Vedanta Ltd, for the acquisition of Mt Lyell Copper Mine in Tasmania and will assess a potential restart.
This follows NCZ’s announcement in late October that it had entered into a binding terms sheet to acquire CMT and allows the company to evaluate a possible restart of operations at the previous producing operation.
The agreement includes a minimum expenditure commitment by the company of US$10 million over a two-year option period towards development and exploration, in addition to the reimbursement of care and maintenance costs.
Proven operations
Mt Lyell hosts a +1.1 million tonnes copper and 940,000-ounce gold mineral resource that provides the potential for a multi-decade mine life.
Tasmania has a strong mining history in which Mt Lyell has played a strong role and has multiple existing operations.
The historical operations were strongly cash flow positive at lower copper prices than the current spot price. There is a Mining Lease, tailings dam, a plant on care and maintenance and other infrastructure is in place.
Potential also exists for a broader rehabilitation services strategy over legacy issues.
Potential to be green supplier
New Century believes that Mt Lyell has the potential to be a major sustainable copper supply with strong ESG credentials and aims to demonstrate this with studies.
There is also potential to operate on 100% renewable energy (hydroelectric power) and the opportunity for potential accelerated restart via tailings reprocessing and existing plant.
ESG focused growth transaction
Execution of the option agreement over Mt Lyell marks the completion of the final key milestone in the company’s recently announced ESG focused transformational growth transaction, which includes:
- Option agreement for a two-year option to acquire the Mt Lyell Copper Mine;
- Strategic investment by Sibanye-Stillwater for a 19.99% fully escrowed position in New Century;
- Retirement of existing senior secured debt with Värde Partners; and
- Replacement of an existing environmental bond at Century.
Forward plan
Looking forward, New Century is undertaking an initial options study, to be completed within six months, to form the basis of a restart feasibility study for Mt Lyell.
New Century will investigate the refurbishment or replacement of the existing infrastructure for tailings reprocessing, with subsequent integration of sustainable in-situ ore processing to follow.
This initial study will be completed over the next six months and will include evaluation of the potential for tailings retreatment, along with a restart of in-situ operations.
The study will form the basis of a restart feasibility study, which may include further drilling and resource definition, targeting completion in the second half of 2023.