Lowry reserves extend Sandfire’s Black Butte copper mine life to 12 years

An updated economic study for Sandfire Resources America’s (TSX-V: SFR) Black Butte copper project in Montana adds reserves over the previous study from 2025, though investment returns remain modest.

The updated preliminary feasibility study (PFS) adds the Lowry deposit to the mine plan and estimates probable reserves at 14.3 million tonnes grading 2.6% copper for 370,000 tonnes contained red metal, Sandfire reported Thursday. Discounted at 8%, the study estimates an after-tax net present value of $126 million (C$178.5 million), with an internal rate of return of 13.3% and initial costs of $474 million. Black Butte is about 90 km east of state capital Helena.

“The new mineral reserve estimate for the Lowry deposit highlights significant growth potential beyond our initial eight-year mine life,” Sandfire Americas CEO Lincoln Greenidge said in a release. “These updates position the Black Butte Copper Project as a critical domestic copper asset when secure US mineral supply is paramount.”

Among most advanced

The updated reserve establishes Black Butte as one of the highest-grade advanced copper projects in the US, even though the updated PFS shows moderate returns against its costs.

Lowry, which wasn’t included in the previous study from last year, is about 2 km from the main Johnny Lee deposit. Johnny Lee hosts 9.5 million probable tonnes at 2.9% copper for 270,000 tonnes of contained copper.

The Johnny Lee underground mine and its processing plant and infrastructure have received state and federal permits, though Thursday’s study doesn’t specify if the expanded mine plan incorporating Lowry requires any permit amendments.

The addition of Lowry could lower unit operating costs by $2.28 to $68.30 per tonne by using mechanized long-hole stoping at Lowry, Sandfire said. 

$476M cash flow

Based on a copper price of $4.70 per lb., the project could generate $3.3 billion in gross revenue and $476 million in post-tax cash flow over the mine life, a 34% increase in cash flow over the previous study. 

Those figures are based on forecast annual production of 31,000 tonnes of contained copper over 12 years.

Sandfire shares fell 2% to 20¢ apiece on Thursday morning in Toronto, valuing the company at C$204.6 million. The stock has traded in a 12-month range of 19¢ to 55¢.