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Feb 2017 - Carbine Res Ltd

Carbine Resources Limited (CRB)Targeting 20kozAu to 40kozAu per year for >20 years at an AISC of <A$550/oz (potentially [ERA ests] <A$450/oz) from QLD’s old Mount Morgan mine. 

  • Carbine’s (CRB’s) main asset is a 75% holding (with a possibility to negotiate up to 100%) in the Mount Morgan gold-copper mine located ~40km south of Rockhampton, currently under the jurisdiction of Queensland’s Govt who accepted environmental liability in 1993.
  • Mount Morgan passed through a series of production phases, over its almost 100-year life from discovery in 1882 to closure in 1990, producing ~8.4moz gold and ~400kt of copper. It had an initial reputation of having extremely high gold grades (eg >300oz/t to 470oz/t in 1912). It has undergone a series of mining phases from underground to open-cut to tailings and dump retreatment, including a whole range of smelting techniques; to result in the current tailings and dumps resources to be retreated for the next phase in its life.
  • The Mount Morgan operation appears to possibly have a life of >20 years (ERA view) from treating the tailings and dumps remaining from previous operations through applying a relatively simple process that generates 3 products, namely : copper sulphate, premium grade pyrite, and gold dore at ~20kozpa to 40kozpaAu at possibly an AISC of <A$550/oz (after by-product credits – and potentially [ERA modelled estimates], <A$450/oz).
  • Carbine expects to produce >200ktpa of premium grade pyrite (>49.5% sulphur with relatively low levels of the usual “nasties” of arsenic, mercury and lead), at a time when Finland’s Pyhäsalmi ~800ktpa premium grade pyrite mine may close in ~2019, which could result in materially higher prices than the US$60/t assumed (spot is often >US$200/t), However, CRB’s pyrite con has to establish a track record before it can be priced properly.
  • CRB has applied a very conservative approach (ERA view) to its production estimates, which have the potential to materially increase cashflow and profitability, such as the usual 80% design rate (hence throughput may be closer to 1.3mtpa than 1.1mtpa); while grades, resource tonnages and even recoveries all have the potential to be higher. Based on its DFS, Carbine expects to achieve a short term (~2 years) payback of its capex, (after ~12months construction and commissioning, and possibly a ~3 month ramp-up period).
  • Written by: Keith Goode
  • Wednesday, 01 February 2017