Tethyan returns Reko Diq to drawing board

Despite favourable new drill results, Tethyan Copper (TYC-A) has sent an unfinished feasibility study on development of the Reko Diq porphyry-copper deposits back to the drawing board.

Tethyan said that capital cost estimates for the project, which sits just inside western Pakistan near the border with Afghanistan and Iran, had increased over 50% after a review. It said there were also operating cost increases, but that these were not as great.

Tethyan had favoured putting the Tanjeel project, a smaller oxide copper resource, into production first, followed by the much larger Western Porphyries deposit. Cost increases at Tanjeel, the company said, “suggest that the development path . . . may no longer be optimal.” It has put the brakes on the feasibility study for a 3-month review of the overall plan.

The oxide deposit at Tanjeel has an indicated resource of 152 million tonnes grading 0.7% copper, plus an inferred oxide resource of 15 million tonnes grading 0.5% and an inferred sulphide resource of 47 million tonnes grading 0.4%. The study had foreseen production of 45,000 tonnes copper annually from a reserve of 129 million tonnes at 0.7% copper.

The larger Western Porphyries resource is under review, subject to an update based on new drilling. The current inferred resource is 729 million tonnes at 0.64% copper and 0.4 gram gold per tonne.

Drilling on the Western Porphyries continues to return good results, with drill holes in a recent 10,750-metre program intersecting resource grades over core lengths in the hundreds of metres. Hole RD-010 cut 438 metres grading 0.73% copper and 0.5 gram gold per tonne, while another hole, RD-015, encountered 147 metres running 0.72% copper and 0.5 gram gold, part of a 237-metre-long stretch of mineralized core. Both holes were drilled in the northern part of the porphyry complex.

Two other holes, RD-005, drilled in the southern part of the complex, and RD-077, drilled between the northern and southern mineralization, also intersected significant mineralization over long core lengths. RD-005 cut 228 metres grading 0.56% copper and 0.3 gram gold per tonne, and RD-077 cut 405 metres grading 0.55% copper and 0.2 gram gold per tonne.

Tethyan holds a 75% interest in Reko Diq, with BHP Billiton (BHP-N) retaining a back-in right on the Western Porphyries. The government of Balochistan province holds the remaining 25%.

A 64-per-share takeover offer for Tethyan from a subsidiary of AIM-listed Crosby Capital Partners (CSB-L) remains open. The bidder has argued that Tethyan will have difficulty financing the project because western Pakistan is perceived as having high political risk.