A GLOBAL miner’s decision to push ahead with one of the world’s largest and highest-grade known undeveloped deposits of zinc, lead and silver in the North West could be swayed by a deal set to be finalised in days.
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The deal has the potential to develop two mines in the Cloncurry region and create up to 750 jobs once they reach production.
MMG has spent more than $650million in pre-development work at its Dugald River project near Cloncurry but is yet to commit the remaining $1 billion needed to bring it into production.
Dugald River, about 65 kilometres north-west of Cloncurry and 85 kilometres north-east of Mount Isa, has a projected mine life in excess of 20 years and would employ about 500 direct employees and contractors once operational.
The prospect of MMG acquiring Altona Mining’s copper-gold project near Cloncurry is widely tipped to make Dugald River more economically viable.
Altona is set to come out of a trading suspension this week with a deal on its proposed $294 million Little Eva project at Mount Roseby near Cloncurry.
Altona went in to the trading halt, then extended its voluntary suspension until Wednesday to allow for “internal governance compliance review” after informing the ASX it was completing documentation covering the “sale of an interest’’ in the project.
The copper-focused miner accepted it was too small to solely fund Little Eva and has long been searching for a partner to finance the development of the project.
Investment bank Credit Suisse said in its analysis of the pending sale that MMG was the likely suitor.
“The economics of Dugald River could be improved by parallel mining of Little Eva copper, leveraging a single infrastructure base and lower unit costs from scale advantage. Australia needs a clean copper exposure with more than one mine,” Credit Suisse researchers said.
An extra two years of mine life, thanks to the recently discovered Turkey Creek deposit, adjacent to Little Eva and included in Altona’s Cloncurry project, is expected to be a sweetener to the deal.
Chinese-owned, Melbourne-based and Hong Kong-listed MMG has been slated as the most logical buyer as the development of Little Eva will help MMG leverage off Dugald River’s existing infrastructure base which includes an accommodation camp, communication infrastructure, sealed airstrip and sealed road access.
But MMG is not the only option as the buyer of Altona’s Cloncurry project, Credit Suisse said.
“We’d like to see (Altona) merge with an existing copper miner who was willing to dual list in this market,” researchers said.
“MMG might not be the only option to deliver this outcome.”
Other potential buyers include Glencore, also prominent in the Cloncurry region with its Ernest Henry copper-gold mine.
While MMG is tipped as the front-runner, there is some uncertainty over the miner’s commitment to Dugald River after last year buying a controlling stake in the $10billion Las Bambas copper project in Peru from Glencore.
Chinalco has been mooted as another possible buyer with its joint venture exploration focus to the south of Little Eva.
MMG ready for project switch
ACQUIRING the Little Eva project from Altona Mining would be of economic benefit as MMG’s focus switches from Century Mine to Dugald River.
MMG is preparing to cease open-pit production at Century after almost two decades of mining at Australia’s largest zinc mine.
General Manager Queensland Operations Mark Adams said recently that a batch of ore stockpiled during the 2014 trial stoping program worth $57 million at MMG’s Dugald River development project near Cloncurry would be processed at Century following the completion of Century open pit production.
Mr Adams admitted it was not the company’s intention to truck ore between the two sites over the long-term.
In a recent update, MMG said the plan for Dugald River was likely to include lower annual throughput over a longer mine life with a simplified logistics chain.
The option of relocating the mill from Century to Dugald River and adding ore from Little Eva is seen as a viable option.
“Perhaps relocation of the mill to Dugald River to be fed by both Dugald River and (Altona’s) the Roseby project could be a good solution,” Credit Suisse researchers stated.
“Ore trucking appears uneconomic, the mill scale is too large for Dugald River, but, the mill is right sized for a combination operation and would reduce capital expenditure and provide operating cost advantages from scale enabled by the bulk tonnage from Roseby.’’
Two years extra for Altona’s Little Eva project
ADDING two years of expected mine life to Altona Mining’s Little Eva project in Cloncurry, where hundreds of jobs are set to be generated, is the likely sweetener for a potential sale.
Altona recently announced the first Mineral Resource estimate for the newly-discovered Turkey Creek deposit at its 100 per cent owned Cloncurry Copper Project.
Turkey Creek is located 1.5 kilometres east of the planned Little Eva open pit mine and processing plant and lies within granted mining leases.
Development of the project primarily hinged on finance, not access to energy and water.
“The principal challenge in developing the project is finance,” Altona Mining managing director Alistair Cowden said.
“Money builds mines so a stable and supportive investment and fiscal climate that welcomes foreign money, be it Chinese, Japanese, British or any other country is essential to attract investment.”
Estimates revealed the Turkey Creek mineral resource to be 21 million tonnes at 0.59% copper, increasing the Global Mineral Resource for the Cloncurry Copper Project by 8% for 1.65 million tonnes contained copper and 409,000 ounces contained gold.
Dr Cowden said recently that the addition of Turkey Creek was exciting for the North West.
“What we are doing now is taking the knowledge we have gained from Turkey Creek and applying that to exploration around Turkey Creek and Little Eva,” Dr Cowden said.
“The discovery is exciting in that it will likely add two years to the existing 11 year mine life and it has highlighted a new style of deposit and many opportunities for similar discoveries. In exploration one has to be humble and it is clear from Turkey Creek we have much to learn.”
The addition of Turkey Creek means its Cloncurry project could “last for decades”.
“When in production we expect some 200 to 250 permanent jobs on site,” Dr Cowden said. “Our inclination is to hire local if the skills we need are available.
“Our feasibility indicates a mine life of 11 years, Turkey Creek will extend that and I firmly believe that when substantial infrastructure such as the Little Eva plant is built, that the project will last for decades given the amazing prospectivity of our tenements.”
With the project in the pre-development stage, the company has workers involved in drilling, field work, heritage clearances, drill pads and rehabilitation works.
Little Eva has a proposed annual production of 38,800 tpa of copper and 17,200 ozpa of gold from the 1.5mt contained copper and 410,000oz contained gold resource.
Dr Cowden did not believe energy and water were restrictions to the development of the project.
“There are two gas-fired power stations in Mount Isa, a power line to Cloncurry and the option of an onsite Power Station,” he said.
“We do not see energy availability as a constraint.”
