Deutsche Bank recently visited Boseto, where construction is underway at Discovery Metal’s (DML) 100% owned Boseto copper project in Botswana. The 3 Mt/y operation will produce ~35,000 t/y copper and 1 Moz/y silver at average cash costs of $1.48/lb, with commissioning salted for mid-2012. The bank said – “following our recent site visit we remain bullish on the potential for further discoveries.
“We have assumed DML’s DP for our modelling which calls for a 15 year 3 Mt/y combined open pit and underground operation producing ~35,000 t/y copper in concentrate. While this is above the current reserve inventory of 21.8 Mt at 1.4% Cu (304,000 t Cu) an updated Zeta underground resource is due next quarter ahead of the December quarter BFS update. We have assumed LOM diesel power and more conservative cash costs of US$1.48/lb net of silver credits but including royalties.
“Finalising funding and construction on track for 2Q CY12 commissioning. With $161 million cash, and banks mandated for $180 million debt (finalise May), DML is fully funded (Plant $175 million, fleet $75 million). At Boseto the plant, offices and camp site are at the concrete pour stage and critical path items such as mills and diggers are due to arrive on site in October ready for 2Q CY12 commissioning.
“Resource growth seems a formality, ore widths and grades the key. Current resources stand at 102 Mt @ 1.4% Cu and 19.5 g/t Ag, spread over two main deposits Plutus (16 Mt) and its extension Petra (9 Mt) and Zeta (35 Mt) but
with the defined deposits open at depth, 1,300 km of further prospective strike length yet to be tested (Hanna Mining having proven other structures are mineralised), we are excited about the exploration potential of DML’s 9,656 km2 holding. DML has restarted it regional program and with a $1million/month budget (five rigs) regular newsflow is expected.