Broker Fox-Davies Capital (FD Capital) said the recent increase in the copper resource at Exco Resources’ Mt Colin deposit could lead to a revision of its valuations of the company, which stands at A$0.65 per share with a 'buy' recommendation, compared to the current stock price of A$0.25.
The resource at Mt Colin was upped by 123% to 1.49 Mt (million tonnes) grading 2.47% copper, as announced in Australia overnight, with the ore included in the overall resources of the Cloncurry Copper Project (CCP). Completion of the mining study for Mt Colin is considered a priority as it has the potential to add significant value to the expanded CCP, whose resources now total 52.4 Mt grading 0.88% copper and 0.22 g/t (grammes per tonne) gold. There is also an Indicated resource of 620,000 tonnes grading 3.14% copper.
Contained copper in the CCP has thus increased to 461,000 lbs with 372,000 oz of Gold.
FD Capital said that it is important to find high grade ore such as Mt Colin as the conceptual design of the mine is now complete to boost the net present value by feeding high grade ore into the process plant early in the life of mine. The broker decided not to update its valuations until the mining study is complete.
The current A$0.65 target is based on a stand alone operation of 3 Mtpa (million tonnes per annum), also producing magnetite.
Further drilling is planned to test for mineable extensions to the mineralisation at the deposit, which is located on a granted mining license. FD Capital noted that historical mining from both the underground and open pit has highlighted the consistent and high grade nature of the deposit.