Coda Minerals Limited (ASX: COD) has achieved a significant technical breakthrough that fundamentally transforms the economics of its Elizabeth Creek copper-silver project in South Australia. The company’s successful development of chloride leaching technology represents a departure from conventional flotation processing, delivering enhanced recoveries and simplified operations that position the project as a competitive mid-tier copper producer.
Technical Efficiency: From Flotation to Leaching
The company has transitioned from an 80% copper recovery flotation-based process to a 95% recovery chloride leaching system, marking what CEO Chris Stevens describes as a fundamental change.The previous flowsheet required crushing and grinding to 53 microns, followed by a complex three-stage flotation process and subsequent regrinding in an ISA mill before proceeding to an oxygen-assisted albion leaching process.
“We’ve cracked it. We put out an announcement in June… We’ve had a big increase in recoveries,” Stevens explained during the interview. The new process operates at a coarser grind size, significantly reducing power requirements and eliminating the need for multiple flotation stages and oxygen plants.
The simplified flowsheet involves direct tank leaching with a four-hour residence time, processing approximately 400 tons per hour through polyethylene tanks. This approach removes approximately AUD $175 million in capital expenditure associated with the previous flotation and albion processing infrastructure.
Enhanced Project Economics
The updated scoping study delivers compelling financial metrics with a post-tax net present value of AUD $855 million compared to the previous AUD $802 million, representing a material improvement despite conservative commodity pricing assumptions. At current spot prices, the NPV increases to approximately AUD $1.2 billion with a 38% internal rate of return. Stevens emphasized the conservative nature of their pricing assumptions:
“We’re talking $4.28 copper, $30 an ounce silver, bear in mind spot’s $38 right now.”
The study maintains the same discount rates and foreign exchange assumptions as previous analysis, ensuring direct comparability.
The project demonstrates substantial scale with planned steady-state production of over 30,000 tons of copper annually and approximately 20 million ounces of silver over the mine life.
Capital Efficiency & Operational Simplification
The new processing paradigm has reduced total capital expenditure by AUD $74 million, addressing one of the key challenges facing junior mining companies in the current capital environment. The elimination of complex flotation circuits, oxygen plants, and specialized grinding equipment has streamlined the capital requirements while maintaining processing capacity. Stevens explained the operational benefits:
“You’re now not doing the second and third stage grinds, especially with the ISA mill, and you don’t have the O2 plant. So net net, it’s a bit lower, and that’s reflected in the $8 a ton opex reduction.”
The company has applied a 10% contingency to capital costs, consistent with industry peers, and has provided comprehensive capital breakdowns to ensure transparency. This attention to detail reflects management’s focus on avoiding the capital overruns that have plagued many development projects.
Interview with Chris Stevens, CEO of Coda Minerals
De-risked Commodity Portfolio
Perhaps the most significant strategic improvement is the project’s transformation from a cobalt-dependent operation to one that achieves robust economics based solely on copper and silver production. This change eliminates exposure to the volatile and less liquid cobalt market while maintaining the potential for significant upside.
“We no longer need cobalt for this project to be well economic and peer comparable. Copper and silver are much more bankable commodities with deep liquid markets.”
The removal of cobalt dependency addresses a key investor concern while preserving optionality for future value creation.
The company removed AUD $1.5 billion in cobalt revenue from their base case model, demonstrating the project’s strength without relying on this historically volatile commodity. However, cobalt remains a potential catalyst, with Stevens noting:
“We believe we’ll get the cobalt back in, but it’s better back in as cream rather than as a base case requirement.”Scale-Up Considerations
Management has identified three critical areas requiring attention during prefeasibility study development: variability testing, geotechnical optimization, and water resource confirmation. Stevens acknowledged these challenges while expressing confidence in the company’s ability to address them systematically.
“We’ve used pretty representative composites taken from pretty vast areas of what is a laterally extensive orebody. Geochemically we see very limited variability between the different deposits.”
The chloride leaching technology benefits from established industrial applications across multiple sectors, reducing scale-up risk. Stevens cited examples of similar technologies operating in Chile and Australia, providing precedent for commercial implementation.
The company is evaluating multiple development scenarios, including a potential stage-one operation focused on open-pit deposits that could provide earlier cash flow and reduced initial capital requirements. With three identified open-pit deposits containing approximately 250,000 tons of copper equivalent, this approach could offer a lower-risk entry point to production. Stevens outlined the strategic rationale:
“Can you have a stage one that is economic on its own? Does it have its own payback? Is it a standalone project with optionality to expand that massively reduces your upfront capex?”
The company’s location in South Australia, adjacent to BHP’s Carrapateena project, provides access to established infrastructure and mining expertise. The regulatory environment and proximity to existing operations enhance the project’s development prospects.
Catalyst Pipeline and Value Creation Opportunities
Management has identified multiple near-term catalysts that could drive further value creation. Mine reoptimization represents a significant opportunity, as the current mine plan was developed under the previous processing paradigm and may not optimize tonnage and grade selection for the new flowsheet.
Resource expansion through continued exploration of the laterally extensive orebody offers additional upside, particularly given the improved economics of the new processing route. The company’s systematic approach to feasibility development, including comprehensive variability testing and geotechnical studies, should provide the foundation for reserve estimation and final investment decisions. Stevens emphasized the importance of this systematic approach:
The Investment Thesis for Coda MineralsTechnical differentiation through proven innovation: Successful development and laboratory validation of chloride leaching technology delivering 95% copper recovery versus industry-standard 80% flotation recovery, providing competitive advantage and enhanced project economics.Compelling financial metrics at conservative pricing: Post-tax NPV of AUD $855 million with 30% IRR using below-market commodity assumptions, scaling to AUD $1.2 billion NPV at current spot prices, demonstrating robust economics across pricing cycles.Reduced capital intensity and execution risk: AUD $74 million reduction in total capex through simplified processing flowsheet, eliminating complex flotation circuits and oxygen plants while utilizing proven tank leaching technology with established industrial precedent.De-risked commodity exposure with significant optionality: Project economics based on liquid, bankable copper and silver markets rather than volatile cobalt dependency, while retaining AUD $1.5 billion in potential cobalt upside for future value creation.Clear value creation pathway: Systematic progression toward prefeasibility study with identified catalysts including mine reoptimization, potential staging opportunities, resource expansion, and cobalt reintegration providing multiple value inflection points.Quality asset in established jurisdiction: Over one million tons contained copper equivalent in South Australia’s proven mining region, adjacent to BHP’s Carrapateena operation, providing infrastructure access and regulatory certainty.Experienced management with feasibility expertise: Leadership team with demonstrated mineral economics and feasibility study experience, emphasizing systematic risk management and realistic project development timelines.
The shift from cobalt dependency to copper-silver focus aligns with investor preferences for exposure to established, liquid commodity markets rather than nascent battery metal segments subject to supply chain disruption and demand volatility. The company’s location in South Australia positions it within a stable jurisdiction with established mining infrastructure, contrasting favorably with many copper projects in geopolitically challenging regions.
The technical achievement of 95% copper recovery addresses a fundamental industry challenge, as Stevens noted: “Mathematically, financially, there’s an awful lot of money left in the tailings dump if you’re recovering 80%.” This innovation represents the type of technological advancement necessary to meet growing copper demand from existing and marginal resources.