Wetar Better Than Bali For Finders' Copper Cash Machine
It’s no Bali, but Indonesia’s Wetar Island in the Banda Sea north of Timor Leste is proving to be a happy stomping ground for the often over-looked copper producer Finders Resources (FND).
With the help of some decent gold mining infrastructure left behind by Billiton four years ahead of its merger with our own BHP, Finders (operator and 73.5 per cent owner) took a staged approach to developing Wetar’s copper, some 3km from the coast.
The initial 3,000 tonne-a-year heap-leach operation feeding a solvent extraction and electrowinning (SX-EW) plant was recently expanded by adding a 25,000 tonne SX-EW plant at a cost of $US117 million. The resultant 28,000 tonnes-a-year capacity is a decent amount of copper in anyone’s language.
More to the point is that the relatively high-grade copper mineralisation and low stripping ratios makes Wetar a low-cost producer. And now that the expanded operation is hitting its straps, it is going to throw off a lot of cash.
So much so that CannaccordGenuity analyst Larry Hill reckons rapid de-leveraging of the balance sheet could see Finders in a net cash position by mid-2018, allowing the company to use cash surpluses to pursue multiple near-mine growth opportunities.
Hill has a 35c price target on the stock. That compares with its subdued share price of late of 17.5c for a market of about $140m. It has been subdued because of the retreat in copper prices in the past two months from $US2.70 a pound to less than $US2.50 a pound.
Forecasts around copper prices nevertheless remain bullish as the world’s big producers struggle with falling grades and the occasional strike.
Wetar is pretty robust at whatever copper price comes its way. At a price of $US2.25 a pound, its life-of-mine (currently seven years) cash surplus is forecast at about $US200m. Crank the price up to $US3.60 a pound, and close to $US500m would come flooding in the front door. Read More.
Plus, Oklo's hunt for a golden elephant, finding Xanadu in Mongolia and Centaurus chasing Brazilian gold. Read More.
One of Australia's leading business journalists, Barry FitzGerald, has joined the Resources Rising Stars' Ten Bagger team. FitzGerald, who is a specialist resources reporter with 40 years' experience, will publish his highly regarded weekly column in Ten Bagger.
FitzGerald - whose column highlights the issues, opportunities and challenges for small and mid-cap resources stocks - most recently penned his column for The Australian newspaper and before that, The Age. His column will give readers the chance to benefit from FitzGerald's extensive contact base, invaluable insights and vast experience of the junior and mid-tier resource sector.