With JSE-listed Copper 360’s Rietberg copper mine, in the Northern Cape, now in production, CEO Jan Nelson says it is a good time for the company to focus on recovering from the major capital expenditure that it took to get to this point and start turning a profit.

“We need to stabilise the operations and focus on profitability, and that's what we're doing. We've had aggressive growth [owing to an] aggressive capital commitment. We need to breathe and focus on recovery optimisation, cost reduction and organic growth,” he said during an online presentation on August 7.

Nelson elaborated that there were another six mines due to come on stream in the near future, and those mines were almost developed. This would now be the focus.

The major change is that the company is transforming from processing loose rocks from lower-grade ores, where the grade variability and the recoveries are erratic.

That will now only represent 22% of the business, as Copper 360 is shifting to underground mining, where it has blocked the ore, secured high-grade material and achieved high margins, low costs and very good recoveries from the sulphides that will now be treated.

The majority of the business will now be the mining of sulphide rock, which is the high-grade rock with recoveries in excess of 90% going through the concentrate plants. This will essentially become 80% of the business.

“We are reintroducing the cluster mining model that the old Newmont and Goldfields started with in this area. They had a whole bunch of mines that fed into a central processing facility. It's that same success story that they had with the development of this copper district that we're replicating.

“So, you know, we're essentially standing on the shoulders of giants, repeating the same model that they did. And what's important is that, in this area, the infrastructure still exists. We have several permitted mines in that mining licence. There are 11 other mines that we will develop. All of these operations are located within a 20 km radius. We've got pre-developed underground access, and there's significant brownfield expansion,” Nelson said.

He also highlighted the importance of local expertise, stating that the Namaqualand people who mined in the area in the past, with all their mining experience and knowledge, were still available and the company had pulled many of those people into its stable.

“Just as wealth is created through a diversified portfolio of investments targeting multiple orebodies that create mining flexibility, business flexibility is what will give us success. And that is an important thing to understand in terms of the model that we're rolling out,” he explained.

Looking ahead, Copper 360 plans to establish a central processing facility at Nababeep, where it will eventually have three plants running. The Nama Copper mining right is towards the north, and the SHiP mining right is where the multiple orebodies are feeding into the central processing facility, creating flexibility for the company.

The copper plating business, although profitable, is small with low margins, generating about R15-million and R20-million in revenue. In contrast, the two concentrate plants are expected to generate, moving forward, in excess of R80-million to R100-million in turnover, marking a significant inflection point.

“Copper concentrate comes at a higher margin, uses less electricity and is far less complex than plating,” Nelson noted.

Only about 21% of the copper produced next year from Copper 360’s operations will come from copper plating, with about 80% coming from the production of copper concentrate. This means that about 61% of earnings before interest, taxes, depreciation and amortisation (Ebitda) will come from concentrate.

Nelson acknowledged that Ebitda has run negatively in June and July owing to the buildup of personnel and equipment for mining, impacting on operating costs. However, with Rietberg mine becoming operational and predominantly processing concentrate, things are expected to turn around.

“We still have to finish our [Modular Flotation Plant One] that will go into production in the next two months,” he added.

The value of the sulphides in Copper 360’s resource is R183-billion, with almost a million tons of copper metal in terms of sulphides. The oxides represent about R10-billion of the total picture, but the major focus and resource are the sulphides.

On August 7, Copper 360 confirmed its mineral reserves at Rietberg to be 2.48-million tonnes at 1.38% copper.

Existing broken ore exists in numerous underground draw points, following post modelling and survey verification. Included in the mineral reserve is a Crown Pillar section (94 000 t at 1.17% copper) and the previously excluded “fringe ore” (500 000 t at 1.37% copper), discovered along the sidewalls of the underground stope between 600 and 850 levels.

A detailed mining viability study and concomitant report was also recently published. It includes the results of an investigation into merging technical and commercial evaluations to gauge the viability of a long-term, or life-of-mine (LoM) operational plan. This plan outlines the development of vital infrastructure and forecasts the production capacity that will underpin future mining endeavours.

“In our strategic plan, we targeted grades of about 1.6%, however, the grades are much better than that in actuality, such as 6% copper, 1.89% copper, 1.5%, 3%, 2.39%, 5.6%, and 1.88%. I think that there's a lot of mines in the world that would sacrifice everything they have to have these kinds of grades underground. And we're not talking exploration drilling anymore.

“This is the actual rock that our team is bringing out of our mine at Rietberg at much higher grades than we anticipated from our resource estimates. That's great news for us, and that will increase the margin,” Nelson said.

He mentioned that drilling had been completed at the Cousin Jack or Wheal Julia prospect, where there was a high-grade oxide resource on the surface.

They are in the final valuation of Koeëlkop, which is another orebody on the surface that will become an openpit and feed sulphide and oxide ore.

The final valuation of Jubilee, another opencast mined by Newmont, is also under way, and Copper 360 plans to expand that operation.

At Rietberg, the company is looking at further expansion, with the potential for another openpit. There is also a joint venture with DRDGOLD on its tailings dumps, and while the verdict is not out yet, the work is progressing.

If it advances, it will significantly impact the bottom line of the business. Copper 360 is also in the final evaluation of the Homeep East mine.

“It's not only just about the Rietberg mine that goes into production and is delivering its all, but it's also about the low-hanging fruit, these six other opportunities that are virtually mine-ready, and that will feed in and grow the margin,” Nelson emphasised.