Coda Minerals (ASX:COD)– Fully Funded PFS + Continuous Drilling Set Up Big 2026

Key Concepts

• Elizabeth Creek Copper Silver Project: Koda Minerals Limited's flagship project in South Australia.
• Prefeasibility Study (PFS): A crucial stage in project development, assessing technical and economic viability.
• Flowsheet: The process design for extracting and processing minerals.
• Net Present Value (NPV): A measure of a project's profitability, considering the time value of money.
• Indicated Resource: A mineral resource for which quantity, grade, and continuity are well-defined.
• Geotechnical Work: Studies related to the physical properties of rock and soil for mining.
• Metallurgical (Met) Test Work: Tests to determine the optimal processing methods for ore.
• Hydrogeology: The study of groundwater, crucial for mining operations.
• Scoping Process (Environmental Approvals): A South Australian government process to define environmental approval requirements.
• Critical Minerals List: A list of minerals deemed essential for economic and national security.
• Definitive Feasibility Study (DFS): A more detailed study following a PFS, providing a high level of confidence for investment decisions.

Koda Minerals Limited: Elizabeth Creek Project Update

This summary details the current status and future plans for Koda Minerals Limited's Elizabeth Creek Copper Silver Project, as presented by CEO Chris Stevens. The company is focused on advancing the project through a fully funded Prefeasibility Study (PFS), with an expected delivery by the end of 2026.

Project Overview and Location

• Project: Elizabeth Creek Copper Silver Project.
• Ownership: 100% owned by Koda Minerals Limited.
• Location: South Australia, adjacent to BHP's Carropatina project and near Olympic Dam. This is described as a "phenomenal location."

Financial Metrics and Commodity Focus

• Previous Focus: The project initially included cobalt, but this has been removed due to marketing and technical challenges.
• Current Focus: The project economics are now based purely on copper and silver, which have "deep liquid markets."
• Scoping Study (Updated):
  • Post-tax NPV: $855 million (based on $9,260/tonne copper, or $4.20/lb).
  • Pre-tax NPV: Approximately $1.6 billion.
• Current Spot Prices (as of the interview):
  • Copper: $11,600/tonne.
  • Silver: $30/ounce (noted as a new record, with expectations for further increases due to utility and limited supply).
• NPV at Current Spot Prices:
  • Post-tax NPV: $1.9 billion.
  • Internal Rate of Return (IRR): 60% at spot prices (compared to 35% on original assumptions), indicating significant "headroom."

Execution Plan and PFS Objectives

The company is progressing towards a Definitive Feasibility Study (DFS) after the completion of the PFS. The PFS is critical for answering key questions before moving to the DFS stage.

• Current Activities:
  • Drilling: Three drill rigs are on-site, utilizing triple-use core (large diameter for metallurgical samples, diamond core from surface for geotechnical work).
  • Resource Update: An update to the mineral resource is anticipated.
  • Geotechnical Work: Significant geotechnical work is underway to refine assumptions. The ore body is described as "big laterally extensive flat lying," approximately 400 meters deep and covering 4.5 square kilometers (comparable to Hyde Park in London or Kings Park in Perth).
  • Resource Confidence: The current resource is 93% indicated, with the mine plan being "pretty much 100% indicated."
• PFS Key Deliverables:
  • Resource Update: Incorporating new drilling data.
  • Tightened Geotechnical Assumptions: Expected to improve project economics ("PEP" - likely referring to potential economic upside).
  • Mine Plan Re-optimization: This is a critical step. The previous mine plan was not re-optimized after the flowsheet change. Re-optimization is expected to significantly improve economics by potentially increasing the head grade and mining "economic tons."
  • Flowsheet Finalization: The new flowsheet, focusing on copper and silver with a leach process, was introduced in late August. This is a standard process, with approximately 20% of the world's copper produced via leaching.
  • Variability Work: Further metallurgical test work across the ore body to confirm the new flowsheet's performance.
  • Mining Method Confirmation: Evaluating options such as longhole open stoping, room and pillar mechanical cut, or a hybrid.
  • Hydrogeology Drilling: Critical path hydrogeology drilling is being funded by the recent capital raise.
  • Environmental Approvals: The South Australian government's "scoping process" for environmental approvals is being finalized, resulting in a comprehensive 400-page document. This process has helped right-size the approvals needed.

Market Perception and Valuation

• Current Market Cap: Approximately $40 million.
• Comparison to Peers: The company believes its valuation is significantly lower than comparable copper projects, even those at earlier stages of development.
• Reasons for Discrepancy:
  • Recent Flowsheet Change: The new copper-silver leach flowsheet was only released in late August, and the market is still digesting this information.
  • Capital Raise: A recent capital raise has led to some "wash out" of shares.
  • Company Age: Koda Minerals is relatively young (five years old) compared to some peers that have been around for 20 years.
  • Perception of "Early Stage": The company feels it's being perceived as too early stage, despite having a significant amount of work completed.

Technical Team and Expertise

Koda Minerals has assembled a strong technical team to execute the PFS and future studies.

• Technical Steering Committee:
  • Colin Moorehead (Chair): Extensive experience, including taking PT Meda to a billion-dollar project and 20 years with Newcrest. Possesses both big company and small company execution capabilities.
  • Study Manager/Chief Technical Officer: Recently hired from Xanadu, having delivered a PFS for that company before its acquisition.
  • Robin Marshall: Along with Paul (on the board), has put 17 projects into production.
• Owner's Team:
  • Mining Engineer: A highly experienced mining engineer has been hired to oversee technical aspects.
• External Consultants:
  • Metallurgy: Metal Energy and Strategic Metallurgy are involved in the flowsheet development.
  • Engineering: Tenders have been issued to well-known companies with significant copper experience.

Funding and Government Support

• Capital Raise: The company recently increased its raise from $8.3 million to $12.3 million to fully fund critical path hydrogeology drilling and other PFS requirements. Shareholders have shown strong support, with the last rights issue being "massively oversubscribed."
• Government Funding:
  • Australia: Copper is not currently on Australia's critical minerals list, unlike in Europe, North America, and China. This means direct government funding for copper projects is less likely.
  • PFS Requirement: A consistent observation across the industry is that a PFS is a prerequisite for project advancement and attracting investment, including potential government support.
• Market Dynamics:
  • Copper Demand: Strong demand is driven by data centers, AI, electrification (EVs), and aging national grids in China.
  • Copper Supply: Supply is constrained due to depleting mines, declining grades, and a lack of new large discoveries.
  • Australian Retail Investor Sentiment: Australian retail investors have been "spooked" by some past copper project challenges (e.g., Mount Isa) and tend to favor gold.

Project Timeline and Future Steps

• PFS Delivery: Expected by the end of 2026.
• DFS: Expected to commence after the PFS and take approximately one year to complete.
• FID (Final Investment Decision): Not explicitly detailed, but would follow the DFS.

CEO's Perspective and Commitment

Chris Stevens emphasizes his commitment to thorough execution and transparency.

• "Dig Deep" Mentality: Stevens describes himself as a "dig deep kind of guy" who embraces challenges and discomfort, drawing parallels to his experience in distance running.
• Due Diligence: The company prioritizes doing things right the first time, documenting all decisions, and avoiding shortcuts to ensure the project is robust and credible for due diligence.
• Belief in the Project: Stevens expresses strong belief in the Elizabeth Creek project and the team's ability to deliver. He highlights that Koda Minerals "get stuff done."
• Market Opportunity: He believes the simplicity of the story, combined with the project's scale and the favorable copper market, will lead to increased valuation as the company delivers on its PFS milestones.

Conclusion

Koda Minerals is strategically advancing its Elizabeth Creek Copper Silver Project through a fully funded PFS, targeting completion by the end of 2026. The company has refined its focus to copper and silver, leveraging a new leach flowsheet and a strong technical team. Despite current market perceptions, the company is confident that the project's robust economics, significant resource, and favorable market conditions will drive future value creation as key milestones are met. The emphasis is on rigorous execution, data integrity, and a clear path towards a Definitive Feasibility Study.