The reset plan will need $27 million capital over three years to ultimately expand the mining throughput to a steady-state 2.5 million tonnes per annum.
When Metals X bought Nifty from Indian miner Aditya Birla in 2016 it was drawn by the substantial resource base and exploration upside there along with the opportunity to increase production through an existing processing plant.
However, it seems a combination of legacy issues, inadequate planning and poor execution meant that upside could not be realised and that Nifty underperformed.
Phase 1 of the reset plan, which focuses on mine planning, development into new production areas and underground infrastructure improvements, is already underway.
It includes putting in place a fit-for-purpose organisational structure to increase efficiency and reduce labour costs.
The company is also strengthening its technical team and hopes to have all its key positions filled this year.
Development of new mining areas has been prioritised an investment has been made in ventilation solutions and paste distribution to new mining areas.
Accelerated grade control and resource definition drilling programs are being run.
Metals X is also spending up on electrical infrastructure and a reticulation upgrade to improve reliability.
It is banking on its recently implemented continuous improvement program to help it bring down its costs.
The Phase 1 target is a throughput rate of 2Mtpa to be achieved during the March 2020 quarter for an annualised production rate of about 28,000 tonnes per annum of copper in concentrate.
At 2Mtpa rates Metals X anticipates all-in sustaining costs will be $6800 per tonne to $7300/t copper.
It estimates about 475m per month of development is needed to achieve 2Mtpa, which it is already reaching.
When it gets to phase 2, that development rate will have to grow to 550m a month during 2020 and then drop to 500m a month thereafter.
Phase 2 of the reset plan is to build off Phase 1 and target 2.5Mtpa throughput rates during the March 2021 quarter to deliver about 35,000tpa of copper in concentrate. The AISC is expected to be $6400-$6900/t.
The key enablers of Phase 2 will be the creation of more mining fronts through the planned drilling programs and further optimisation of the mine sequencing, cycle time reductions and productivity improvements.
Metals X plans to fund its reset plan through a mix of debt and cash flow.
It has an undrawn uncommitted borrowing base debt facility of US$20 million with Citibank
The company told the ASX it was in discussion with financiers to make sure there were enough funds in place to pay for the reset plan.
Metals X managing director Damien Marantelli said the plan was the result of four months' work.
"Nifty was purchased by Metals X to take advantage of the installed infrastructure, the substantial copper endowment of the mine and the significant geological upside that was recognised at the time," he said.
"The key fundamentals driving that decision have not changed. Nifty has the processing capacity to achieve the targeted production rates, a life-of-mine offtake partner, a substantial existing resource base and strong exploration upside.
"Unfortunately, performance at Nifty has suffered from a number of legacy issues, as well as a lack of planning and focus, poor decision making and poor execution. The Metals X board acknowledges this.
"We now have the right team and the right plan in place to unlock Nifty's considerable value."
As part of the planning process undertaken in the review Metals X has established leading indicators to support successful operations into the future. Those include:
- 18 months of grade controlled drilled material ahead of mining;
- Six months of material fully developed ahead of mining; and
- At least six mining fronts available across the life of mine.