We have initiated coverage of Stavely Minerals (ASX: SVY), which has recently released its Thursday’s Gossan/Cayley Lode Scoping Study - which has demonstrated a potentially technically and financially feasible open cut operation based on an updated MRE of 60 Mt @ 0.46% Cu, 0.09 g/t Au and 2.8 g/t Ag (0.58% CuEq). The Study highlights a project that could generate strong returns based on current metals prices – with an estimated pre-tax NPV7 of A$905 M, IRR of 43%, and net cashflow from operations of A$1.5 B.
The project development envisages a standalone conventional process plant with a front-end crushing and grinding circuit and back-end sulphide flotation cells, with an annual throughput capacity of 4 million tonnes per annum (“Mtpa”). However, this is just a starting point - and there is potential for various lower-capex development options, including a starter pit operation that could generate cashflows that could transition into a small-footprint underground operation.
Several nearby prospects, that could potentially add to the mineral inventory including the Junction copper prospect, remain to be assessed, and there are also areas where drilling is required to update the resource confidence.
Early stage, broadly spaced drilling at the Freddys Find gold prospect at the 100%-owned Stavely Cu-Au Project has returned strong intersections of breccia hosted, Intermediate-sulphidation gold mineralisation, within a 2 km x 750 m magnetic feature interpreted as representing hydrothermally altered volcanic breccia system. Intersections include 32 m @ 1.00 g/t Au, including 13.7 m @ 1.8 g/t Au amongst others.
This, and other prospects, confirm the prospectivity of the Project for arc-related copper and/or gold mineralisation, with the Stavely Belt interpreted to be a Cambrian-aged analogue of the highly productive continental Andean Volcanic Arc in South America.
Between them, the gold strategy and the development opportunity provide a two-pronged approach to a project located over highly prospective rocks, with the Company being the first to take a holistic, belt-wide approach over the terrane. With the Company due to commence drilling over several prospects, we should expect steady news flow over coming months.
