Finders: Study shows significant improvement in Wetar copper project economics

By Ruli Setiawan

ASX-listed Finders Resources Limited announced on Wednesday that the revised bankable feasibility study (BFS) has confirmed significant improvements in the already robust feasibility of the 95 percent owned Wetar Copper Project in Maluku Province.

The key objectives of the revised BFS were to reduce project capital intensity, reduce overall funding requirement, reduce construction time, increase total and maximum copper production and produce earlier stronger cash flow. The BFS has met all of these objectives, the company said in a statement.

Based on the BFS, the post-tax net present value (NPV) of the Wetar Copper Project is US$273 million.

Key financial metrics at various copper prices are set out below:

	Flat LOM Copper Price (US$/t)
Price Case	$6,000	$6,500	$7,000	$7,500	$8,000
(US$m)	338	395	452	509	566
Project NPV 10 (US$m)	195	234	273	312	351
Project IRR	52%	60%	67%	75%	83%

Finders will use the BFS as the basis for negotiating financing for the project with the objective of completing credit approvals for the senior facilities in the first quarter of 2014.

Other key findings of the BFS include:
? At current copper prices, project EBITDA for the first full year of production would exceed $132m ? a payback period on capital costs of 1 year.
? Project EBITDA Margins exceed 70 percent at full production and current copper prices.
? Life of mine copper production of 155,000 tons over a planned 10.5 year production period.
? Total capital costs are expected to be $132.4m (before any accuracy provision or contingency). Because of the greater level of detail in the revised BFS, Finders expects any contingency to be reduced.
? Operating cash costs of $0.88/lb2 while the project is operating at efficient production levels.

The study is based on a ramp-up to full production of up to 28,000 tpa copper cathode.
? The existing 1,825 tpa Demonstration Plant is in the process of being upgraded to 2,920tpa and restarted. First copper is expected in late 2013.
? Full capacity of 28,000 tpa will be reached with re-commissioning and expansion of the Whim Creek plant approximately 15 months after commencement of on-site construction activities. Assuming a first quarter 2013 commencement of equipment mobilisation, full production will be reached by the third quarter of 2015. Once the Whim Creek plant is commissioned the demonstration plant will continue running while there is sufficient copper inventory.

Higher grades and recoveries achieved during the previous demonstration plant phase have the potential to add more than a full year?s production and $70m to the project NPV. Given the high operating margins the project is not overly sensitive to changes in operating or capital costs.

Editing by Reiner Simanjuntak