Caravel Minerals very large, lowish grade copper play in the Wheatbelt just got interesting after the ASX listed company this week tabled a set of drill results that show grades up to three times that of the existing global resource.
Caravel has successfully targeted a higher-grade domain of disseminated sulphide mineralisation going over 1% copper at the Bindi West deposit at its namesake project, located 120km northeast of Perth in the Wheatbelt region of WA.
New results from a diamond drilling program highlighted multiple, high-grade copper zones, returning results up to 6 metres grading 1.03% copper from 108m down-hole, incorporated within a broader zone of 20m @ 0.5% copper from 94m deep.
Another hole, completed 400m to the north turned up a 30 metre mineralised zone assaying 0.55% copper from 100m down-hole that contained a higher-grade intercept of 18m @ 0.8% copper from 102m deep.
The new intersections are very significant for Caravel, as its 2016 mineral resource estimate and subsequent scoping study were modelled on a wide, single domain, lower grade copper mineralisation envelope that did not account for the higher grade zones now being delineated.
With a clear geological structural control established now for the higher-grade mineralisation at the 100%-owned Caravel project, the company has the potential to selectively mine the higher-grade zones and hence, start considering alternate development options for the deposit.
This could include extracting the higher-grade mineralisation earlier and perhaps staging the mine schedule to reduce upfront CAPEX with a smaller plant, thereby improving the economics by receiving earlier cash flows and enhancing the project’s overall NPV.
According to Caravel, a new mineral resource estimate has commenced taking into account the higher-grade domains and should be completed early next year.
The new estimate will provide the basis for a revision of optimised open pit designs and mine planning timelines, which will be used to evaluate project development options.
The current mineral resource estimate at the Caravel project is 402 million tonnes grading 0.29% copper, which comprises the flagship Bindi West and Bindi East deposits and the satellite ore systems at Dasher and Opie, located further to the south.
Whilst is could be argued that the grade is low the deposit has a remarkably low stripping ratio of just 1:1 and low cash operating costs compared to its peer group of companies with similar size and grade copper deposits globally.
A previous scoping study that did not account for the more recent higher grade discoveries showed an eye-watering operating cash flow figure before tax of USD$2b over its extraordinarily long initial mine life of 21 years with capital paid back in 3.
The unusual copper porphyry deposits, with valuable molybdenum credits thrown in for good measure were originally discovered back in 2010 by Dominion Mining.
The renewed focus on the grade of these deposits is an initiative by Caravel management to extract greater value from the assets, rather than the bulk tonnage, lower-grade operation originally envisaged for the project.
The mineralisation at Caravel is also quite promising, dominated by the copper iron sulphide mineral chalcopyrite with lesser pyrite, so the metallurgy of extracting the copper ores is potentially quite straightforward via a conventional processing route.
Copper recoveries up to 92% were delivered from flotation tests carried out as part of the scoping study back in 2016.
Caravel also looks like joining the wave of ASX listed companies who are taking advantage of significant increases in ore sorting technology to upgrade its mineral resources.
The company recently completed some very successful ore sorting trials on the lower grade zones within the deposit, which provides a significant and relatively cheap opportunity to upgrade uneconomic ores and may represent a later expansion option for the project.
The Caravel deposits lie within a 20km corridor of dead flat mineralised strike in the Wheatbelt over which the company holds the dominant ground position.
Caravel management said that all currently defined resources have a high potential for expansion and that numerous other untested mineralised prospects and exploration targets exist within its tenements.
Going forward, the Caravel will advance its two-year old scoping study to a PFS level by mid-2019, and it will produce an updated mineral resource and ore reserve model to preferentially incorporate the higher-grade domains.
A new mine design and development schedule can then be developed to deliver a higher-grade ore stream earlier, fundamentally changing the project’s monetisation for Caravel.
Importantly, native title has already been extinguished in the region as Caravel’s project lies wholly within the existing South West Native Title Settlement area in WA.
For now though, Caravel continues to develop the project with additional RC drilling which is planned for the current quarter.
Caravel’s project is intriguing. At first glance its grade looks modest but the sheer size, scale and favourable geology at the project appears to negate the lower grade and then some.
The new higher grade discoveries will add another dimension still which should make for interesting reading in the upcoming PFS that will take its lead from the scoping study that shows an average annual free operating cash flow figure before tax of over USD$95m a year.
That’s not a bad start I guess.
