Phoenix Copper Ltd – Interim Results

Phoenix Copper Ltd – Interim Results

Phoenix Copper Limited (AIM: PXC; OTCQX: PGMLF), the AIM quoted North American focused base and precious metals exploration and development company, is pleased to announce its unaudited interim results for the six months ended 30 June 2019.


Empire Copper Mine, Idaho, USA

–      Updated ‘Measured & Indicated’ open pit resource containing 73,872 tonnes copper, 29,813 tonnes zinc, 139,000 ounces gold and 6.038 million ounces silver

–      New open pit economic model to produce 7,665 tons copper equivalent annually (7,000 tons copper and 1,600 tons zinc) over the life of mine (with initial production of 8,600 tons per annum)

–      Bankable Feasibility Study (“BFS”) on open pit heap leach SX-EW project underway

–      Land acreage increased to 5,717 acres, including 2,420 acre Navarre Creek gold zone

–      Maiden ‘Inferred’ sulphide resource at newly discovered Red Star lead / silver zone

–      Lead financial adviser appointed to arrange structured project finance

Corporate and Financial

–      $2.1 million raised during the period

–      $1.0 million invested in the Empire Mine

–      Net assets increased to $10.56 million (2018: $9.61 million)

–      20% decrease in administrative costs to $452,129 (2018: $568,381), excluding (non-cash) share-based payments charge of $211,124

–      Net loss for the period of $666,682, comprising administrative costs and (non-cash) share based payments charge (2018: $679,817)

–      Company name changed to Phoenix Copper Ltd

Chairman’s Statement

Dear Shareholders

We are pleased to present our first set of interim results as Phoenix Copper Ltd. The name change reflects our focus on the mining-friendly state of Idaho and our commitment to commence early production of copper from the Empire mine.

Since my last letter to you we have been preparing the updated economic model for the open pit copper project at Empire, and I am glad to say the economics of this project are increasingly robust. We plan average annual production of 7,665 tons of copper equivalent (7,000 tons copper and 1,600 tons zinc) over the 11 year life of the mine, with initial production of 8,600 tons per annum. The initial head grade of 0.60% copper is significantly higher than the global average for copper oxide mines.

According to a May 2018 study by Mining Intelligence, operating mines currently have an average grade of 0.53%, a figure which includes higher-grade sulphide ore mines such as we have underneath our open-pit project, while copper projects under development have an average grade of 0.39%.

With an initial estimated capital cost of $51 million, and a life-of-mine copper equivalent cash cost of $1.33/lb  in the early years, rising to $1.72/lb, the project generates a life of mine EBITDA of $202 million and after tax cash flow of $177 million at $3.25/lb copper, resulting in a 7% NPV of $55.5 million post-tax and IRR of 33% at $3.25/lb copper, and  $25.5 million and 20% at $2.75/lb copper.

We also have 139,000 ounces of gold and 6 million ounces of silver in the open pit at Empire, which are not included in the above projections.

At the time of writing, copper is trading just above a two year low at $2.63/lb. The market seems more fearful of a continued US – China trade war and threat of a global recession, than optimistic about the accelerated roll-out of the electric vehicle pool and the switch to green energy. It must be remembered that the copper story is also one of a growing supply deficit as there are few new mines being built, and the grades in the existing ones are declining.

Wood Mackenzie, one of the more reliable forecasters, sees copper rising to over $3.80/lb in 2020 and $3.70 in 2021, which is when we hope to commence production, and a long-term price of $3.30, which would suit us very nicely.

We believe that the Empire open pit represents the first stage in a potential world class mine, surrounded by significant exploration upside, and offering exposure to high-value metals with compelling demand and supply fundamentals, and a major role to play in a new world order of clean energy and electric vehicles.

As announced recently we are working closely with our project finance advisers, Medea Natural Resources, on raising the mezzanine and construction finance, predominantly through debt rather than equity, and look forward to updating the market with developments in the coming months.

Thank you all for your support.

Marcus Edwards-Jones MA

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