Strong Buy : First Quantum Minerals Ltd
(FM : TSE : C$2.60 : Issued 43.0M)
Mike Jones 20 7518 7365 Canaccord
For the first time, First Quantum releases resource data on its new
Lonshi deposit
Lonshi now has a measured and indicated resource of over 650 million
pounds of contained copper at a very high grade of 5.75%
Lonshi is to be processed through Bwana Mkubwa. The effect of the high
grade means that production at Bwana Mkubwa is expected to actually
increase to 30,000 tonnes per annum of copper from the current 10,000
tonnes per annum, but that the headfeed throughput rate will have to
be reduced. An internal feasibility study is looking at the net effect
of this (reduced throughput offset by mining, transport, crushing and
grinding, and increased back-end power costs), but we believe that it
should not greatly affect unit operating costs
Under this scenario, Bwana Mkubwa should be able to produce the
marginal 20,000 tonnes per annum of copper at pretty much the same
cost of around $0.40 per pound, which is the approximate cost prior to
acid credits at Bwana Mkubwa. The additional 20,000 tonnes per annum
44 million pounds) at a margin of around $0.30 should be capable of
generating additional cashflow of around US$15 million per annum from
late 2002, paying back the estimated capital bill of between US$15-20
million in a little over a year |
