After beating its manufacturing steerage for 2020 and reporting a file fourth quarter, Copper Mountain Mining (TSX: CMMC) is guiding an extra 22% improve in manufacturing this yr.
The B.C.-based miner’s 75%-owned Copper Mountain mine, 20 km south of Princeton, B.C., produced 77.6 million lb. of copper final yr, in contrast with steerage of 70 to 75 million lb. copper. The mine additionally produced 29,227 oz. of gold and 392,494 oz. of silver.
Within the last quarter of 2020, the open pit operation achieved file quarterly manufacturing, churning out 23.1 million lb. copper, 8,959 oz. of gold, and 144,934 oz. of silver.
“Our working workforce executed on our working plan, beating our manufacturing steerage for this yr,” Gil Clausen, Copper Mountain’s president and CEO, acknowledged in a information launch. “We completed the yr sturdy with file manufacturing within the fourth quarter because of greater grades, which we anticipate to proceed in 2021.”
This yr, with elevated recoveries and better grades, the corporate expects manufacturing to develop to 85 to 95 million lb. copper, 25,000 to 30,000 oz. of gold and 500,000 to 550,000 oz. silver. All-in sustaining prices are projected to stay regular, at US$1.80 to US$2 per lb.
Expanded mill capability will assist to drive the rise in manufacturing on the standard crush, grind, flotation operation. Copper Mountain is increasing the mill to 45,000 tonnes per day this yr, up from 40,000 tonnes per day, with the set up of a 3rd ball mill. Set up is scheduled to start early this yr, with commissioning following within the third quarter.
About US$33 million is budgeted for expansionary spending in 2021, most of that targeted on the mill enlargement. One other US$Three to US$four million shall be spent on exploration, targeted on reserve enlargement.
Final November, the corporate launched a research that appears at a possible further expansion to 65,000 tonnes per day beginning in 2024. Clausen famous that when the present enlargement is full, the corporate shall be specializing in the following stage of enlargement.
Mitsubishi Supplies owns a 25% stake within the Copper Mountain mine.
Pierre Vaillancourt, an analyst at Haywood Securities, raised his goal worth on Copper Mountain to $3.00 per share from $2.00 per share following information of the corporate’s fourth quarter outcomes. (At presstime in Toronto Copper Mountain was buying and selling at $2.38 inside a 52-week buying and selling vary of 28¢ and $2.42 per share.)
“We consider CMMC affords enticing development and optionality, and is nicely positioned to benefit from a rising copper worth,” Vaillancourt stated.
“With a reserve on the Copper Mountain mine of 31 years (410 Mt grading 0.25% copper and 0.11 gram gold per tonne), inside an M&I useful resource of 50 years (978 Mt grading 0.21% copper and 0.10 gram gold per tonne), we consider that an enlargement to 65,000 tonnes per day is probably going, and that additional enlargement is feasible because the New Ingerbelle deposit comes on line,” he commented in a analysis observe. “Valuable metals characterize 30% of the contained metallic worth on the deposit, manufacturing from New Ingerbelle will improve annual gold manufacturing to 50,000 to 75,000 oz.”
The mining analyst additionally famous that there’s “vital optionality” on the firm’s Eva copper challenge in Australia, about 95 km northeast of Mt. Isa in northwestern Queensland. The corporate envisions Eva as a traditional open pit operation with a traditional crush, grind, flotation circuit. A feasibility for Eva accomplished in Might 2020 outlined a mine lifetime of 15 years from the iron oxide copper gold deposit with annual manufacturing of about 106 million lb. copper-equivalent (about 100 million lb copper and 14,000 oz. gold).
Vaillancourt famous that “choices for the challenge embrace discovering a associate, self-financing, or promoting opportunistically.”
Bryce Adams, an analyst who covers Copper Mountain Mining for CIBC, raised his 12-18 month goal worth on the corporate’s shares from $2.40 to $2.75.
“Even with a barely conservative method to the price profile, now we have a strong FCF [free cash flow] outlook for Copper Mountain, and observe that if administration is ready to ship prices on the mid or decrease finish of steerage vary, this is able to characterize upside to our money circulation estimates.”
“At spot costs,” he wrote in a analysis observe, “we mannequin 2021E FCF of $90 million, representing a powerful FCF yeild of 21% relative to friends at ~11%.”