The ex-Rio Tinto miner says a turning copper price and a greater understanding of its underrated Sepon copper-gold project in Laos will deliver fresh vitality to its share price, which has risen and fallen like the tide over the past six months.
Speaking exclusively with MiningNews.net in Perth, Hegarty said plans to float Hellenic Copper Mines (of which Oxiana owns 30.5%) were progressing well and it was likely a Cyprian IPO would get away in the first half of next year.
HCM own the Skouriotissa copper mine, which cost $31 million to bring online in 1996 at an initial rate of 5000 tonnes of copper per annum.
Initially, slow leach rates and bad weather dogged the mine but the operation is in turnaround and US$7 million is being spent lifting output from 8000tpa to 12,000tpa.
Hegarty said the IPO would raise more than $22 million for working capital, which could be used to accelerate output growth and exploration. The mine has a resource of about 250,000t of copper, which at current extraction rates will keep it going for 20 years.
“This IPO will be well supported,” Hegarty said. “The Cyprian stock exchange has only been going for about three years and at the moment there is too much money chasing too few stocks.
“What you’ve got to consider is that it’s not only the Cyprian investors in there, there is also money coming in from the Middle East and Russia as well.”
Hegarty said despite waning sentiment towards the Philippines, it would maintain its ground position in that country until it had time to develop them further. He said spinning them into a separate float was not out of the question.
But the company maker for Oxiana remains Sepon. Oxiana has 80% of the project, which is forecast to produce 40,000tpa of copper and 125,000ozpa of gold over an initial mine life of 20 years.
Operating costs are estimated at about US43c per pound for the copper and $153 per oz for the gold. Annual earnings, according to one study, are put at about $51 million before interest and tax.
Hegarty said Oxiana put its first rig on site at Sepon last Sunday despite it being the wet season. Another two rigs will arrive in September and a further rig in October.
“We’ll be putting downs 30,000m worth of holes,” Hegarty said. “Rio [the previous owner and current minority partner] put down 45,000m – the purpose of this extra program is to get the project to proven status so that we have a bankable feasibility study.”
Hegarty rejected claims that Laos was a difficult place to do business. He said the Communist Laos Government was highly keen to see the mine start and that insurance providers EFIC and MIGA had come on board to support the development.
Oxiana is keen to have Australian broking support, but if it can’t excite investment interest soon, don’t expect it to hang around. Like numerous Australian companies, Hegarty said it had begun discussing its prospects for an Alternative Investment Market listing in London.
At the time of writing Oxiana stock was trading at about 10c.
