April 13-15, 2015 World Copper Conference: RMC is #1The annual CESCO World Copper Conference was held last week in Santiago, Chile. It is the world's largest copper conference and as usual was attended by several hundred of the world's top copper mining executives and analysts who discuss the latest trends, challenges and opportunities in the industry. A major focus of this year's conference was how the long time to complete copper mining projects will result in large copper deficits in the near future and persisiting for decades to come. It was discussed that the average copper project now takes 11 years from advanced exploration to production. There was extensive discussion about the five (5) major barriers to complete copper mining projects:
1) Financing and Project Economics ---- capex intensity for Tier 1 projects is currently around a high level of about $18,000/ton;
2) Access to Power and Water--- in the past 10 years, the average cost of energy has increased by nearly 70% in copper producing countries to $84/MWh and high water stress is expected to occur in many of the top copper producing countries;
3) Social Opposition--- on the rise globally;
4) Resource Nationalism;---- higher taxation and royalties, forced dowstream processing and partial or total state ownership;and
5) Deposit Quality ----- the average copper grade at producing mines has declined from 0.75% in 2005 to around 0.65% today and is expected to decrease to about 0.52% by 2025. Tier 1 projects have an average grade of 0.55%, which is expected to decline sharply below 0.45% by 2025.
RMC's Timok Project commanded significant attention because none of the above-referenced 5 barriers to complete copper projects exist at Timok:
1) Extremely Favorable Financing and Project Economics: A low capital intensity phased approach as infrastructure is in place already with excellent potential for Stage 1 DSO mine with minimum surface infrastructure required. Close to major infrastructure: road, rail power, Danube port, and smelters. Potential Stage 2 concentrator and increased production. Potential Stage 3 Block Cave with lower capital intensity due to springboard from exisitng mine.
2) Power and Water: Very cheap power and lots of water.
3) No Social Opposition: Timok is located in a major mining complex with a long history of mining. The community and municipality are supportive of mining. Apparently the main question every month in the community is when will the mine start and when will jobs be available. The national government in Serbia is supportive of mining and wants to grow GDP from the mining sector; it is also putting $300 million into its own smelter. There is no other government and community more receptive globally at the moment than Serbia.
4) No Resource Nationalism: Fair taxation and royalties, and as discussed above, no smelter required.
5) Deposit Quality: Grade is King and Timok has it. Of all global copper deposits with greater than 1 million tons contained Cu, Timok has the highest grade at 1.7 mmt contained Cu at 2.6% Cu and 1.4% g/t Au. This does not include the block cave mine potential which because of its size and grade is likely to become even more exciting than the high grade massive sulphide mineraliztion that currently defines the Timok Project.