Blackthorn Resources Seeks Lower Capital Costs at its Zambian Unit

Blackthorn Resources Limited, owners of Kitumba copper project in Mumbwa says it envisaged a lower than anticipated capital cost of developing the project which it seeks to develop into a full scale mine and produced over 39,000 of copper annually, the company said in its report. 

The minerals exploration and mining company listed on the Australian Securities Exchange says in its report that it expects to lower the capital cost for the development of the Kitumba copper project in Mumbwa-which is forecast to double with increased explorations and investments in the project.

Accordingly, the initial feasibility study which was completed in September last year shows  a capital investment of US$358 million is required to develop an underground operation with a mine lifespan projected to last 11 years, says company’s Resources chief executive officer Mark Mitchell. 

Ore production at Kitumba is forecast to be about three million tons per annum through the use of a combination flotation, solvent extraction and electro winning plant process to produce the envisaged 39,000 tones of the red metal annually. The report adds that the Kitumba project was initially thought to have a net present value of US$108 million and an internal rate of return of 12.7 percent which may vary based on the activities to be undertaken at the site until fruition, hence the hope to reduce the capital costs in the venture to maximize on the available ore body.

“Blackthorn Resources was hoping to lower the capital cost expectations of its Kitumba copper project in Zambia. Considerable progress has been made on the Kitumba copper project previous feasibility study (PFS) optimisation and we are greatly encouraged by the outcomes to date. 

Mitchell adds that while the preliminary PFS results for September last year indicated that the Kitumba project was economically and technically feasible, the optimisation work is providing further indication of enhanced economics in line with our expectations outlined when the optimisation programme started. Optimisation work on the project so far indicated improved fee grade and recovery, lower operating costs and substantially better economics at the site. The results of the optimisation study are expected to be released by the end of April.

Last year, the company had projected that the drilling at the Greenfield Kitumba project would commence on the deposit area KITUMBA PROJECT UPDATE: 

KEY POINTS

Drilling to recommence on the Kitumba deposit area with a projection of 5,000 meters, the initial campaign envisaged up to three drill rigs targeting infill drilling for potential upgrade of the Mineral Resource to the measured category as well as step-out drilling for potential Mineral Resource extension to the north-west. The Pre-feasibility Study (PFS) was said to be progressing well with encouraging results from initial metallurgical testing. Its study report was expected in the third quarter of last year to assist the company decide on the future of the project.

According to Mitchell; “There has been considerable progress made at Kitumba and we continue to see positive economic potential in the Project. The PFS is progressing exceptionally and is an essential step in preparing an application for a mining license later in the year.” He said in his report. 

We look forward to receiving the final results of the metallurgical testing and the outcomes of the PFS study, which the results will be announced to the market as soon as they are finalised. 

“The remobilisation of drill rigs in the near future will allow us to do further infill drilling.” He adds 

The company is targeting a potential upgrade of the Kitumba Mineral Resource to include a portion in the measured category as well as step-out drilling to assess potential for Mineral Resource extension. According to the Blackthorn Resource Limited, it is the desire of the Company to build an asset base that delivers outstanding returns for shareholders and benefits for all stakeholders. It is focused on shareholder value and growth through the acquisition and responsible development of mineral resources and mining projects. 

The Company’s primary assets are currently in West and Southern Africa targeting Copper, Zinc and Gold. However, it continues to seek and evaluate other projects in Australia and internationally to add to its diverse portfolio of mineral assets.  Opportunities are sought in safe, secure and stable democratic countries offering an attractive environment for direct investment.   

It is envisaged that Blackthorn Resources will add value for shareholders through:

  • Acquisition of base and precious metal projects at varying stages of development. 
  • Developing projects through to feasibility study level.
  • Taking projects through to funding and production.  Where appropriate this will be through strategic partnerships.

 

Blackthorn Resources aims to comply with leading practice in corporate governance, health, safety and environmental standards in Zambia and where ever it operates globally as responsible mining company, it says on the website.

Blackthorn Resources, one of the companies seeking to join many other multinational mining companies come amid reports from the World Bank about the fears of countries so much reliant on copper as a major source of revenue for the country with the fall in copper prices in recent months. 

A recent study of the global metal trends by the global lender, World Bank recently shows that Zambia, one of the countries heavily dependent on copper exports risks shocks from the falling demand of the red metal by major consumers including China in recent months. 

Prices of the red metal on the metal market; given the free-fall of the pricing has raised eyebrows among players in the metal market, Zambia included. However, the World Bank believes the sharp decline in demand should not send shivers in copper producing nations and that the reduction in commodity prices on the international market as China, the major importer, is expected to stabilise its gross domestic product (GDP) to seven percent. 

In recent weeks, copper prices on the London Metal Exchange have while rising and falling steadied around US$6,600 after falling to its lowest level spurring uncertainties by investors who have been forced to wait for an upsurge from policymakers in top consumer (China) about monetary policy easing.

According to World Bank Africa region chief economist Francisco Ferreira, while there is cognisance of some dangers, there is no need for countries like Zambia to be in panic mode as the situation will stabilise.

If China closes down relationships with some countries, there may be certain consequences for the region particularly for countries that rely heavily on copper exports that China imports and other commodities, Zambia for example. Other countries have closed down relationships with China in terms of oil for investment deals such as Angola.

“To the extent that China’s reduction in demand for the commodities lowers their prices as we have seen happening already a little bit, there could be more consequences for those economies-China will decelerate the scenario, we expect that China will stabilise to seven of GDP,” said Ferreira.  Speaking recently during the World Bank conference via a video conference in Washington DC, Ferreira cited weaker demand for metals and other key commodities, combined with increased supply as some of the factors that could lead to a sharper decline in commodity prices.

He added that if China demands, which accounts for about 45 percent of total copper produced in addition to a large share of global iron ore prices, this could decline more sharply, with significant negative consequences for the metal producing countries. “Although sub-Saharan Africa’s exports remain concentrated in a few strategic commodities, the region’s countries have made substantial progress in diversifying their trading partners,” Ferreira said.

World Bank Group’s vice-President for Africa Maktar Diop said strategic reforms are needed to expand young people’s access to science-based education at both the country and the regional levels, and to ensure that they graduate with cutting-edge knowledge that is relevant to meet the needs of the private sector employers.

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