Adelaide | Rex Minerals – the poster boy of the State Government’s mining strategy – has put its proposed copper mine at Ardrossan on the back-burner while it investigates downscaled options for the project.
It has also parted ways with its managing director, Mark Parry, who resigned today, effective immediately.
The company’s shares were hammered in early trade on the stock exchange, tumbling 25 per cent.
The news comes just 10 days after Mineral Resources Minister Tom Koutsantonis announced State Government approvals for the project, offering it a Mining Lease.
“The lease is a major step in the approvals process for the significant project, which would see copper mining return to the Yorke Peninsula after a 100-year absence, creating more than 700 construction and mining jobs,” the Minister trumpeted.
While it’s a setback for the mining sector, some local landowners and agriculture industry representatives opposed to the mine welcomed the news.
“You’ve made my day; made my year in fact,” neighbouring land owner and secretary of the Yorke Peninsula Landowners Group, Lauren Kakoschke, told InDaily this morning.
Rex’s announcement today said it would extend its bankable feasibility study for the Hillside copper project on Yorke Peninsula “looking at options for lower-cost staged development”.
“Effective immediately, an advisory board of industry experts has been engaged to oversee the alternative development options for the Hillside Project.
“While detailed development plans have focused on a 15 megatonnes per annum base case operation … studies have identified other options that the company believes should be investigated.
“The potential for a smaller-scale start-up operation is among these options, and the Rex Board believes it is in the best interests of all shareholders to broaden the scope of the feasibility study into an extended feasibility study, and include these alternate development options.”
The alternatives include an emphasis on lower up-front capital cost options, an initial smaller footprint for the pit and alternative design scenarios, covering mining method, haulage, processing and shipping.
InDaily understands the proposed slurry pipeline and port upgrade at Ardrossan could be taken off the table; instead the ore could be trucked to Port Adelaide.
In a separate announcements to the stock exchange today, Rex said managing director Mark Parry had resigned with immediate effect.
“In the interim period until a permanent replacement is made, Mr Parry’s role will be assumed by Dr David Carland, acting as executive chairman,” the company said.
Dr Carland said Parry’s resignation followed the decision to delay the mine’s feasibility study to concentrate attention on a smaller-scale start-up.
The news was a blow for shareholders, with the company’s share price hit in early trade.
Back in 2011, Rex shares were riding high at $2 as a concept study proposed a two-stage development costing around $650 million for a six-year stage one and then a further six to eight years of stage two funded by internal cash flow.
In October 2011, Rex scrapped the staged development concept for an expanded mine plan.
That went to a pre-feasibility study stage in October 2012 with an estimated capital cost of $US850 million.
At the time, Rex said it expected government approvals in the second half of 2013 and development to start in the first half of 2014.
But there were delays.
The SA Government lease offer announced a week ago was “at least nine months longer than most expected”, an industry analyst said.
“This was a significant delay.”
The analyst told InDaily today the project had problems seeking finance in its proposed single-stage form.
“Rex believe Hillside is very much a robust and economic project.
“There were no major surprises or ‘blow-outs’ in the work on the feasibility study.
“What is a challenge is the current market for financing projects and therefore Rex wants to spend some more time revisiting options for a smaller-scale optimised start-up.”
Shares in the minerals explorer took a hit in the last week, down from 43 cents to 38.5 cents and well down on its 53 cents mark six months ago.
In the first half-hour of trade today, they slumped 25 per cent to just 28 cents.
The office of Mineral Resources Minister Tom Koutsantonis said it was seeking advice on the announcements.
“The State Government prides itself on thorough and efficient mining lease approvals.,” a spokeswoman said.
“The assessment and consultation process was appropriate considering the project’s complexity and location.
“We will seek advice from the Department of State Development on the company’s announcement.”
Agricultural group Grain Producers SA, long-time opponents of the project, said the delay would allow more time for it to address environmental concerns.