The met work resulted in 1.75 million tonnes of resource material that was previously classified as transitional ore being reclassified as fresh ore, increasing the total fresh ore resource by 32% to 8.65Mt.
The increased proportion of fresh ore will result in the production of more marketable/saleable concentrates and will positively impact project economics.
The company also reported a high-grade zinc hit of 19m at 20% zinc, 0.6% copper, 23.3 grams per tonne silver and 0.5gpt gold below the Eastern Lens and outside the existing resource.
Sulphur Springs has a resource of 17.4Mt at 5.8% zinc, 1% copper, 0.3% lead, 21gpt silver and 0.2gpt gold.
Develop will release an updated economic study and new reserve estimate later this month.
“Sulphur Springs goes from strength to strength with every piece of technical work we do,” Beament said.
“The drilling, the metallurgical test work, the mine planning and the financial studies all show that this project is tracking well towards a development decision.
“It has scale, it has the metals needed for the energy transition and it is perfectly located in the tier one jurisdiction of the Pilbara.
“The imminent revised feasibility study and the updated reserve estimate will reflect the outstanding results of this work, paving the way for us to unlock the value of this excellent asset.”
A definitive feasibility study for Sulphur Springs released in late 2018 returned capital costs of A$169 million for an operation to produce about 15,000 tonnes per annum of copper and 35,000tpa of zinc over 10 years.
The study returned robust economics, including a pre-tax net present value of $472 million, but was based on metal prices of US$6300 per tonne copper and $2650/t zinc.
Even after major metals volatility of late, copper is still trading just above $8000/t, while zinc is at near three-year lows of $2230/t.
Canaccord Genuity analyst Tim McCormack is forecasting a 1Mt per annum operation to produce an average of 48,000tpa of zinc and 9000tpa of copper at costs of A8c per pound of zinc, net of by-product credits and treatment and refining costs, over nine years from the June quarter of 2025.
A mine plan for Develop’s Woodlawn zinc-copper project in New South Wales is also due later this year.
“We anticipate a final investment decision to be made by end of CY23 given the relatively low capex hurdle (CG estimate $55 million) and short development timeline to first production (CGe first production March quarter 2024, with less than six months to steady state),” McCormack said.
“We expect the asset to support a production profile of 31,000tpa of zinc and 10,000tpa of copper at C1 cash costs of circa 31c/lb payable zinc (net by-product credits and TC/RC’s) over an initial 7.5-year mine life.”
Meanwhile, Anax Metals has been granted works approval for the nearby Whim Creek copper project, in which Develop owns a 20% stake.
The works approval allows the company to push ahead with its plans to build a $71 million operation to produce about 8000t of copper and 14,000t per annum of zinc over eight years.
Anax is now awaiting the final regulatory approval, the mining proposal.
Develop already has a revenue stream via its $400 million underground mining contract with Bellevue Gold.
Shares in the company closed near a four-month high yesterday of $3.50. Canaccord has a speculative buy rating and $5 price target.
