New Century Resources Ltd (ASX:NCZ) has laid solid foundations for a transformational ESG focused growth strategy building on strong zinc production from the flagship Century operation in northwest Queensland along with possible copper and gold production from the Mt Lyell mine in Tasmania.
Earlier this month the company signed an option agreement to assess the acquisition of the Mt Lyell Copper Mine that holds 1.1 million tonnes of copper and 940,000 ounces of gold with upside potential.
This agreement provides the company with up to two years to study the opportunity which, if taken up, will allow it to undertake an accelerated restart of operations from the existing resources and established mining infrastructure.
READ: New Century Resources executes option agreement over Mt Lyell Copper Mine, assessing restart
New Century describes Mt Lyell as one of the largest near-term production ‘green’ copper assets on the ASX and believes the transformational initiative will enable it to accelerate its growth as a leading tailings management and economic rehabilitation company.
“An important milestone”
NCZ’s managing director Patrick Walta said the Mt Lyell agreement represented “an important milestone in advancing our vision of global leadership in sustainable economic mineral development”.
"We are optimistic about the future of Mt Lyell and are excited about the potential to extract 100% green copper and gold over a multi-decade mine life, while utilising 100% renewable energy."
He said: "We believe Mt Lyell can provide significant value to shareholders, particularly given that historical operations generated strong cashflow at a copper price lower than the current price.
"We also remain positive about the long-term prospects of copper, with a robust outlook for global economic growth and increased demand arising from transformative technologies such as electric vehicles."
Growth transaction
Executing the option agreement marks the completion of a transformational growth transaction for New Century that also:
- Significantly strengthened the balance sheet and unlocked free cash flow, through the retirement of existing senior secured debt and replacement of an existing environmental bond; and
- Secured a 19.99% fully escrowed strategic investment by Sibanye-Stillwater.
The company is now undertaking a six-month initial options study at Mt Lyell, which will form the basis of a restart feasibility.
Century “engine room”
Walta said the current operations at Century, the largest tailings reprocessing operation in Australia, were the ‘engine room’ for its growth strategy with a path to a mine life extension to at least 2030.
Century is “delivering long life, sustainable cash flows and financial flexibility for growth”.
“We are pleased with the progress at our foundational operations, Century Mine, following a record September quarter that delivered A$31.5 million in earnings before interest, depreciation and amortisation (excluding hedge settlements), strong zinc recoveries and long-term hedging at historically high zinc prices.”
The Century project in northwest Queensland is the largest tailings reprocessing operation in Australia.
Walta added, “we continue to focus on the further development opportunities present in Silver King and the East Fault Block, which may provide increased metal output and extend the mine life.”
Record quarter
The record September quarter and EBITDA at Century along with high zinc prices and strong market fundamentals are solidifying the project’s foundation while the Silver King & East Fault Block developments look set to provide increased output and life extension.
This has been supported by an environmental bond restructure that provides cash flexibility for growth and distributions. It has also removed an EBITDA lock-box mechanism.
The replacement of MMG’s environmental bond with a traditional environmental bond and full repayment of the current corporate loan with Värde, unlocks immediate flexibility for cash generated by Century operations.
Sibanye-Stillwater partnership
Another key component of the company’s “transformational” ESG focused growth strategy is a strategic partnership with Sibanye-Stillwater Limited that comprises a strategic 19.99% investment in the company via an equity investment of A$61 million.
This will enable Sibanye-Stillwater to accelerate growth through the acquisition and development of economic rehabilitation projects and build a global leading tailings management service.
An upfront placement to Sibanye-Stillwater and institutional investors and an underwritten non-renounceable entitlement offer, followed by a conditional placement to Sibanye-Stillwater will result in a total raise, subject to rights take-up, of a minimum of A$105 million.
Sibanye-Stillwater CEO Neal Froneman said: "We have been impressed with what the New Century management team has achieved at developing a globally significant zinc producing business through the reprocessing of tailings, whilst facilitating the rehabilitation of an old mine site.
"We are pleased to partner with New Century Resources in this exciting next phase of their growth at Mt Lyell and support their vision of growing their Tailings Management advisory service business model globally, to produce green metals and address environmental legacy issues.”
Walta said: "With the strategic investment by Sibanye-Stillwater and the option over Mt Lyell Copper Mine, New Century is in an enviable position to grow its ESG focused business through potential near-term ‘green’ copper supply while also developing a client-focused tailings management services division.”
