Comet Resources Ltd (ASX:CRL) is set to acquire the Mt Margaret Copper Project and associated regional tenements near Cloncurry in Queensland from Glencore-owned Mount Isa Mines Ltd.
This project is only 7 kilometres from key processing infrastructure at Ernest Henry, where Mt Margaret ore was previously processed into export-quality copper concentrate.
The Mt Margaret Copper Project successfully produced from open pit mining from 2012 until 2014, when operations were suspended due to the copper price environment and outlook at that time.
Economically viable copper
With a more buoyant copper price making the project economically viable once again, Comet is keen to take the reins on defined high-priority extensional and regional exploration targets.
Mt Margaret contains JORC open-pit resources of 13 million tonnes at 0.78% copper and 0.24 g/t gold with more than 95% in the measured and indicated categories.
The mine also boasts near-term production potential, with two open-pit deposits already pre-stripped and significant potential for resource growth through further exploration.
Comet is set to raise in the vicinity of $50 million to fund the acquisition and initial post-acquisition pre-development activities.
"Transformational event"
Managing director Matthew O’Kane commented: “Acquisition of the Mt Margaret Copper Project is a truly transformational event for Comet.
“Mt Margaret is a substantial past-producing copper mine that we’ve been able to acquire due to portfolio rationalisation of a global tier-one mining company.
"It contains existing mineral resources of 13 million tonnes at approximately 1% copper equivalent, with over 95% of this resource in the measured and indicated categories.
"The majority of Mt Margaret’s resource sits in two already pre-stripped open-pits providing reduced capex pathways to production.”
About the project
Mt Margaret consists of six mining and infrastructure licences covering 3,412 hectares and three exploration tenements covering 46 sub-blocks.
The project consists of two primary project areas joined by a haul road and infrastructure tenement.
Mining originally commenced at Mt Margaret in July 2012 after the project was acquired from Exco Resources Ltd (ASX:EXS) in June 2011 for $175 million by Xstrata Plc, and $124 million was subsequently spent on project development and infrastructure.
Xstrata was later acquired by Glencore, in 2013, which ceased mining in 2014 as copper entered into a bear market.
Since Glencore’s decision to cease mining, the project has been on 'care and maintenance'.
Copper prices today are approximately 30-40% higher in US dollars and 90-100% higher in Australian terms than at the time of the decision to suspend mining at Mt Margaret.
Perhaps more importantly, the medium and long-term outlook for copper is positive.
Following this acquisition, Comet aims to expand the current JORC mineral resource by drilling strike and depth extensions of current resources. It will also undertake a comprehensive review of the project database to delineate further regional drill targets highlighted by past geophysical and geochemical work.