Thor Mining PLC (LON: THR) has announced the start of lixiviant and recovery testing for copper at its Kapunda prospect. This sets up a trading possiblility for the results of those tests in perhaps a month’s time. For it is the results of those tests which will change prospects rather than the commencement of them.
Thor Mining owns 30% of Envirocopper Ltd, which itself is subject to a 75% earn-in at the Kapunda copper prospect. By working on the project Envircopper stands to gain significant ownership in it that is.
Kapunda itself has been prospected for decades, from 1965 to 2008. Past drilling allows the calculation of an inferred copper resource at the site. That is, there is copper there as well as likely associated gold mineralisation. But that’s only the first stage of the necessary process. It then needs to be proven that the metals – in general – or copper – to be specific – can be extracted in an economic or profitable manner.
A standard mining practice is to look at previously explored or prospected deposits and consider whether more modern extraction techniques upgrade it from unprofitable to profitable. This is just what Thor Mining is doing at Kapunda.
Copper mining used to be about extracting the ore then sending it off for processing. There was a switch from copper sulfides to oxides with the adoption of the SX-EW process in the 1980s. It’s now possible that the adoption of another technique could make previously unviable deposits profitable. This is the ISR process – in-situ recovery. The basic idea is that instead of removing the overburden then the ore, why not pump down acid or other liquids to put the copper into solution and pump that back up again?
ISR has been used entirely successfully in uranium mining – as that earlier SX-EW process was before adoption by the copper industry – so, let’s see whether the technology can be transferred to copper? Some trials in the United States indicate that for certain deposits this could be truly workable.
This is what Thor Mining is doing at Kapunda. Trying out a known to work mining technique – ISR – and seeing whether it works on copper, whether it works on this specific copper deposit. If it does then that Kapunda deposits which seemed unviable using older techniques might be now profitable to exploit.
Results of this test might be expected in about one month. That’s the setup for the trading opportunity, what are those results going to be? ISR works on copper? Works on this specific Kapunda deposit? That’s interesting but that’s not all of it.
The thing about proving a technology is that something which works in one place can and should then be tested on other, similar, places. One mining truism is that there are always many more low-grade deposits than there are high-grade. So the proof of a technique that can economically exploit low-grade deposits has many potential places of application.
That’s the larger Thor Mining trade to be thought about – what if ISR works not just on Kapunda copper but more widely and more generally?
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Tim Worstall is a freelance writer specialising in economics and the financial markets.