After increasing the Kipoi Central stage 2 pit ore reserve last week by 112% to 30.1 million tonnes at 1.31% copper for 394,500 tonnes last week, Tiger updated the January 2013 definitive feasibility study for the stage 2 solvent extraction electrowinning operation.

Stage 2 now has an after-tax net present value of $US755 million ($A856.4 million), up 100%, excluding sunk capital expenditure of $121 million incurred to date.

The post-tax internal rate of return has increased by 143% to 107%.

The project will produce 532,000t of copper cathode, a 41% increase, over 11 years – a two-year extension.

Life of mine cash operating costs are expected to be $1.04 per pound, down 8.7% due to a lower strip ratio, while cash costs for the first two years of operation are still expected to be just 72c/lb.

The DFS assumes a copper price of $3.40/lb until 2018 and $3/lb thereafter.

“The numbers speak for themselves – Kipoi is a world-class copper project,” Tiger managing director Brad Marwood said.

The SX-EW plant will produce about 25,000t of copper in its first 12 months of operation before increasing to 50,000t per annum after that.

The fully funded SX-EW plant is expected to contribute 12,000t copper cathode this year, while the stage 1 heavy media separation plant is expected to produce 39,000t copper in concentrate at average operating costs of 30c/lb.

It comes after the plant produced 41,255t last year, within revised guidance and well above the initial 37,000t guidance.

Foster Stockbroking director Mark Hinsley welcomed today’s news as “extremely positive” and expects the SX-EW plant to generate around $200 million of operating cash flow once at full production of 50,000tpa.

“With the capex program set to be largely complete by 2015/16, TGS will then transition to be in the envious position of being able to pay dividends to shareholders or reinvest to grow organically,” Hinsley said.

“We believe the company could also look at merger and acquisition opportunities over the course of the next 12-18 months in an effort to diversify by asset/jurisdiction/project stage.”

Foster retained a buy rating for Tiger but lifted the price target by A5c to 70c.

It comes after a strong performance from Tiger shares – which have doubled since October and are trading at close to two-year highs.

Shares in the company have risen by more than 23% so far this year.

Hinsley said despite the recent rally, the valuation gap between Tiger and its peers remained, with Tiger trading at a steep discount on an enterprise value to earnings before interest, tax, depreciation and amortisation basis.

“Notwithstanding the ‘DRC discount’ factor, we feel this is overdone, particularly in light of the fact that TGS has been successfully operating in the DRC for many years now and this represents an opportunity for investors/shareholders to build exposure to the stock,” Hinsley said.

Tiger shares were up 3.6% to 42.5c this morning.