2021 Preliminary Economic Assessment
A Preliminary Economic Assessment (PEA) was released in January 2021 using three year trailing metal prices as of September 2020. The PEA, completed by Micon International Limited with mining and metallurgical input from both QME and Fairport, included a new updated mineral resources estimate showing 5.2Mt of Indicated Resources at a combined base metal grade of 4.3% (equivalent to a copper equivalent grade of 2.4%), together with 11.7Mt of Inferred Resources at a combined base metal grade of 2.8% (copper equivalent grade of 2.0%).
Importantly, the new Indicated resource estimate of 5.2Mt reflects a significant increase from the previous estimate of 2.8Mt from the earlier 2017 Scoping Study. The PEA indicates that Parys Mountain contains over 160,000 tonnes of copper and almost 400,000 tonnes of combined zinc/lead.
Three separate development cases or scenarios were evaluated as part of the PEA, utilising planned mine tonnages ranging from 5.5Mt at 1,500tpd in Case A, to 11.4Mt at 3,000tpd in an expanded Case C.
The expanded Case C produces the most attractive financial returns, indicating a total cash operating surplus of more than £408 million over a 12-year mine life, which translates to a pre-tax net present value discounted at 10% of over £96 million with an IRR of 26%.
Parys Mountain Cases A and C - Operating and Financial Summary
| Case A | Case C | ||
|---|---|---|---|
| Life of mine | Years | 12 | 12 |
| Production | TPD | 1,500 | 3,000 |
| Total tonnes produced | Mt | 5.9 | 11.4 |
| Net smelter returns | $m | 478 | 1,015 |
| Operating costs | $m | 252 | 503 |
| EBITDA | $m | 226 | 512 |
| Pre-production capex | $m | 70 | 99 |
| Sustaining capes | $m | 34 | 76 |
| Net cash-flow post tax | $m | 122 | 336 |
| Corporation tax | $m | 24 | 67 |
| Net cash-flow post tax | $m | 98 | 269 |
| Pre-tax NPV10 | $m | 36 | 120 |
| Post tax NPV10 | $m | 26 | 92 |
| Pre-tax IRR | % | 20 | 26.0 |
| Post-tax IRR | % | 17 | 24 |
The base case economic model in the PEA utilized three-year trailing metal prices of $2.81/lb copper, $1.20/lb zinc, $0.95/lb lead, $16.67/oz silver, and $1,459/oz gold, with an exchange rate of £1.00/$1.25. These prices compare to end of Oct-21 spot prices of $4.45/lb copper, $1.56/lb zinc, $1.09/lb lead, $23.90/oz silver, and $1,784/oz gold, with an exchange rate of £1.00/$1.37
