Monday, 21 August, 2006

by Ben Sharples
Mining Net News

COMPASS Resources has increased the throughput for its Browns base metals oxide project in the Northern Territory, pushing capital costs to $A69 million for the project, which is expected to come online by mid-2007.

Following the completion of engineering and optimisation studies, Compass has increased the plant capacity from 1 million tonnes per annum to 1.3Mtpa. Capital costs for the 1Mtpa operation were pegged at $55 million.

The operation is expected to produce about 10,000 tonnes of LME-grade copper cathode, 1000t of cobalt and 750t of nickel over a 10-year mine life. Start-up and commissioning to full production is expected to be complete by mid-2007.

First production from the oxide project was previously slated for the end of the year.

In addition, Compass said documentation with its Chinese partners Hunan Nonferrous Metals (HNC) was "proceeding rapidly". HNC will fund up to $72 million of the capital cost of the base metals oxide development in exchange for a 50% stake.

Compass chairman Gordon Toll told MiningNews.net the two parties were about to launch feasibility studies into the development of the larger sulphide resources at the Browns project.

"We're going to be jointly doing that with our Chinese partners, we've done a lot of work in the past so we won't be throwing that out – the flotation test work has been done," he said.

"We've got a timeline for it, but we've got a couple more weeks to scope things out with our partners, but the timeline is 18 months worth of study work, plus an additional six months of permitting work."

HNC has committed to provide all the capital required to develop up to a 4Mtpa sulphide operation. Brokers have estimated capital costs of a 2Mtpa operation at $300-400 million.

Elsewhere, Compass has kicked off preliminary engineering work at its 14.5 million pound Mount Fitch uranium project located near the Browns project, with company anticipating a sharing of infrastructure between the two developments.

"There'll be a completely separate processing plant but the administrative infrastructure will be shared, there's no need to duplicate that," Toll said.

Shares in Compass shed 12c (3.2%) to $3.60 during morning trade, capitalising the company at $443 million.