The Trident Project is located in North West Province, Zambia, 150 km west of Solwezi. The Project comprises of the Sentinel copper deposit and Enterprise nickel deposit, situated on the Kapombo Dome within the Katanga Supergroup of sedimentary rocks on the western end of the Lufilian Arc. Sentinel copper mineralization is dominated by chalcopyrite disseminations and veinlets hosted in phyllite, consisting of layered, continuous sheets. Enterprise nickel mineralization occurs as hydrothermal sulphide disseminations and veinlets hosted in shale and sandstone. The area was first prospected in 1959 with First Quantum acquiring the Project in 2010, followed by the first Resource estimate published in 2012. Since production commenced in 2015, Sentinel has produced 807.3 kt copper. Stripping began in 2015 at Enterprise but was put on hold in 2016. The Technical Report effective Dec 31, 2019 revises the Sentinel mine plan and provides the basis for restart of Enterprise.
Sentinel was planned as a conventional open pit, with electric shovel, hydraulic excavator, and ultra class trucks. To increase productivity, trolley-assisted haulage is used in conjunction with in-pit crushing and conveyance. The revised mine plan adds an additional IPCC and reduces the pit from five phases to four. Sentinel is mined as terraced pits, pushing east and west, rather than a sequence of nested pits. LOM strip ratio is 1.9. Enterprise is planned as a medium scale pit. Pit geometry is challenging, resulting in a production profile that is not smooth and with few pit walls that remain static. Resulting strip ratio is 8.3. Infrastructure at Enterprise is minimal and makes use of existing infrastructure at Sentinel.
Processing uses a SAG mill and ball mill. The mill is designed for 55 Mtpa copper and 4 Mtpa nickel. An expansion of the copper circuit to 62 Mtpa has been planned. Sentinel recovery is 91.2% primary and 79% non-primary ore and Enterprise recovery is 85% primary and 60% non-primary ore. Smelting takes place at the company’s Kansanshi smelter located nearby. The Project generates an NPV10% of US$4,357 M and US$819 M for Sentinel and Enterprise respectively.
| Copper | Nickel | |
|---|---|---|
| Price (US$/lb) | 3.00 | 7.50 |
| Payable | 96.6% | 75% |
| TCRC/Transport (US$/lb) | $0.38 | $2.88 |
| Royalty (GRR) | 7.5% | 5% |
| Sentinel | Tonnes (Mt) | Cu (%) | Cu (kt) |
|---|---|---|---|
| Reserve | 876.8 | 0.46 | 4,012.4 |
| M+I | 83.9 | 0.46 | 367.7 |
| Inferred | 62.3 | 0.36 | 226.5 |
| Enterprise | Tonnes (Mt) | Ni (%) | Ni (kt) |
|---|---|---|---|
| Reserve | 34.7 | 0.99 | 344.50 |
| M+I | 3.0 | 1.39 | 41.6 |
| Inferred | 9.3 | 0.71 | 66.5 |
At first glance, it is easy to be mesmerized by Sentinel’s US$8 B undiscounted cash flow, amounting to NPVs of US$4.7 B and US$4.4 B at discount rates of 10% and 8.5% respectively. However, Mining Momentum cautions the reader when using NPV to evaluate properties that are in production, especially when pre-production capital is not shown. In addition, cashflows 2029 and beyond appear less robust than the first decade. One aspect that provides significant upside to Sentinel is copper price, given the use of US$3/lb at the time of the report, and current price in excess of US$4/lb. Enterprise has been plagued with issues since its inception with high stripping ratio and inflexible pit layout. Project cash flow is weak up until Year 3, and is weak again Years 6 and 7. Pre-production capital spend is also suspiciously low, providing another source of project risk. With nickel prices settling down from its rally, only time will tell whether Enterprise finally takes off or if First Quantum puts the brakes on once again.
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective Dec 31, 2019 (INSERT), with commentary from the author. Statements above do not represent the views of First Quantum Minerals. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.