JOHANNESBURG (miningweekly.com) – Northern Cape copper company Copper 360 announced on Wednesday that it has signed a memorandum of understanding (MoU) with DRDGOLD’s Far West Gold Recoveries tailings retreatment subsidiary to conduct a due diligence on its copper tailings dams to assess their economic copper recovery viability.

During the due diligence period, Far West Gold Recoveries will, through an independent expert, determine the total tonnage of tailings material by Lidar survey applying a density of 1.4 tonnes per cubic metre.

Copper 360 estimates that there are about 50-million to 60-million tonnes of dump material with grades varying between 0.18% and 1.5% copper in the dumps, with the potential to contain 450 000 t of copper metal in situ.

“This potential partnership, if viable, would help us bring more copper to account in such a way that it doesn't distract us from our mining focus,” Copper 360 CEO Jan Nelson told Mining Weekly in a Zoom interview following the March 27 news service announcement of the Johannesburg Stock Exchange (JSE). (Also watch attached Creamer Media video.)

During the due diligence, Far West Gold Recoveries will independently assess the economic viability of the copper dumps and if the results are to their satisfaction, the parties will enter into a joint venture agreement. Far West Gold Recoveries will be allowed to acquire 50% interest in the tailings dams at a price to be independently agreed and will become the operator of the dumps, while Copper 360 continues to focus on its many current mining activities, which include commissioning two processing plants at the Rietberg mine and evaluating five new mines.

“Our expertise and focus are not tailings treatment although we recognise the potential of the copper dumps. It is therefore logical that we have approached the world leaders in dump retreatment to see if a potential partnership could be negotiated to potentially bring these assets to account if the due diligence is viable,” Copper 360 stated in a JSE news service report.

Up to now, the tailings dams have been lower on Copper 360’s list of priorities because of the huge capital that is required to turn them to account and Copper 360’s greater focus on the hard rock potential of its mining licence.

But the advance of the copper price and discussions with DRDGOLD have elevated tailings dam retreatment higher up the priority list, especially since the entry of Far West Gold Recoveries allows Copper 360 to keep its eye firmly where it is meant to be.

If the due diligence is negative, Copper 360 will simply continue along its aggressive growth path and if it is positive, a significant copper stream will quickly be added to Copper 360’s production line.

“The timing is right and opportunity is right,” said Nelson.

HISTORICAL TAILINGS BUILD-UP

The O’Kiep, Carolusberg, Lower NamaCopper and Upper NamaCopper tailings dams were brought into the Copper 360 fold by the reverse listing that Shirley Hayes' SHiP Copper did with Nelson’s Big Tree Copper ahead of Copper 360’s listing on the JSE’s AltX in April last year.

The tailings emerged from the O’Kiep copper company of 1937 and were deposited by the Nababeep, O’Kiep, Carolusberg mines from about 1940 all the way up to the 1990s.

They now provide potential to bring more revenue to the table without Copper 360 having to bear the total capital burden as well as its potential to add more cash flow to the company and a bigger dividend flow to shareholders.

The first thing the strategic partnership would bring is technical capability, gleaned over many decades by DRDGOLD in the field of extracting value from dumped mine material.

“If viable, the partner will then, jointly with us, help to carry the capital cost of a plant like this, which could easily be R500-million to R700-million.

“We would then not have to carry that alone, and we could maintain our focus on the mining licence, the hard rock, that we’re bringing to account, while we've got a partner who will then be the retreater of these dumps.

“If we contribute equally, then we would have 50% of the economic benefit as well as all the advantages of their technical capability, their operational ability, and also the fact that any build would be jointly funded,” Nelson pointed out.

When Copper 360 listed, it was looking to ramp up over three years to 30 000 t of copper metal a year. Now, it is looking to ramp up to between 60 000 t and 80 000 t of copper production a year over the same three-year period.

“If we discover another Chile-type openpit – and we've seen signs from our drilling that the potential’s there – and all these dumps come off, and we still have to tackle the rest of our mining permit, then we can easily take the copper production in five years up to about 100 000 t to 120 000 t of copper metal.

“That makes us the size of a Khoemacau copper operation, which was recently bought out by the Chinese. The potential of this area is to have a copper producer in the next three to four years which will be similar in size to Khoemacau and probably be one of the top 30 copper mines in terms of size, although size isn't everything, and we must focus on grades and costs. But we will be one of the top 30 copper mines in the world,” Nelson projects.

Mining Weekly: What insight will be provided by the due diligence and what are the highlights of the MoU that Copper 360 has signed with the DRDGOLD subsidiary, Far West Rand Recoveries?

The due diligence really comes down to DRDGOLD understanding the volume and grades of these copper dumps, which are quite big, and whether these dumps can be economically brought to account. The highlight for us is that, subject to the due diligence, we have got the world leader in the retreatment of dumps to look at this. Although they are gold-focused, they have got some of the best hydrometallurgists in the world and the due diligence will help us to understand what's going on before we potentially move ahead.

What is Copper 360 hoping to get out of the due diligence study on the four tailings dams within the Copper 360 fold?

The win will be if the volume is there and the grades are such that one can economically recover the copper from the tailings dams. There's probably 50-million to 70-million tonnes of material lying there and about 450 000 t of copper metal, depending on what grade one estimates at, and that is a lot of copper. Bringing that to account would be a high volume operation, and that is what DRDGOLD is used to and obviously that necessitates a lot of capital. To get that right is the trick. We're obviously hoping that it will work out but there's a chance that we might do the due diligence and see that economically it doesn't stack up. If, with a partner like DRDGOLD, we can’t see it being economically viable in terms of the capital structure and payback, then nobody's going to be able to get the copper out of these dumps and we’ve got a big mining licence and then we move on.

What would be the main technical, operational and financial benefits of the due diligence giving a thumbs up?

The first thing would be that we have an extremely technically capable partner. If viable, the partner will then jointly with us help to carry the capital cost of a plant like this, which could easily be R500-million to R700-million. We would then not have to carry that alone, and we could maintain our focus on the mining licence, the hard rock, that we’re bringing to account, while we've got a partner who will then be the operator of these dumps. If we contribute equally, then we have 50% of the economic benefit and have all those advantages of their technical capability, their operational ability, and also the fact that we jointly would fund any build. In that way, it would lessen the capital requirement and we could still focus on the mining licence.

While DRDGOLD has vast experience in recovering gold from tailings, could there not be a challenge with the recovery of copper from tailings?

With their hydrometallurgical experience, it would not be a big problem for them to also look at how one extracts copper, and remember, we've also got quite a highly skilled hydrometallurgical team in our stable and they will work together. The bigger challenge here is to understand the recoveries, and that work is fairly stock standard, and then to understand the capital profile of the volumes we have to move, and that's really where I think their expertise comes in. It's not that the hydrometallurgy isn't important. It's obviously critical, but I think both groups have got that expertise in-house, which shouldn’t present a problem.

What will become of the dumps if the due diligence gives a thumbs down?

Then those tailings dams can be used by the new mining operations for the tailings deposition or we can build solar panels on them for our solar farm. First prize would be that the due diligence finds that the copper is there and that it can be economically extracted, but if not, there are other uses. We continue to focus on the Rietberg mine, which we are commissioning, the NamaCopper plant that we've bought has gone into production, and is producing its first concentrate, and we're about two months away from commissioning the MFP 1 concentrate plant that we've built. So, we're quite busy and focused on that which we do. The tailings dams were always lower on our priority list because of the huge capital that is required to bring them to account and we were more focused on the hard rock. But with the advance of the copper price, and the fact that we've been having discussions with DRDGOLD about them potentially having a look at this with us, has brought it up the list. But it does it for us in a way which doesn't compromise our strategic objectives. If it works, it will suddenly add a huge copper stream to our production line and if it doesn't, we’ll continue with our aggressive growth plan in any case. But I think the timing is right and opportunity is right and it doesn't detract from our resources in terms of trying to see if this could be viable.

What is the latest news on the five new copper mining assets that Copper 360 is evaluating?

We've been doing drilling on surface and we are evaluating two potential openpits that could come into production during the course of this year and early next year. We are currently looking at two mines that are similar to Rietberg. They've been drilled out and we've now completed the geological evaluation and we will soon state a resource for them. The mining engineers have already started looking at the mine plans. Then, at Tweefontein, we recently also announced significant drilling results. That’s our focus and that's quite a lot of work for us to do, and that's again why I'm saying, this potential partnership if viable, would help us bring more copper to account in such a way that it doesn't distract us from our focus.