The company has outlined two development options, a high capital start-up to maximise returns and a lower capital option with a longer life.

The high capital option would have upfront capital costs of $A340 million and would produce 34,000 tonnes per annum of copper and 108,000 ounces of gold per annum over a 14-year mine life.

C1 cash costs would be just US59c per pound of copper due to the gold credits and the break-even copper price would be $1.40/lb.

The lower capital start-up option comprises upfront capex of $A83 million for a smaller starter open pit for a 17.5-year mine life.

C1 costs would still be a low US69c/lb and the break-even copper price would be $1.65/lb.

Havilah managing director Dr Chris Giles said both options had been considered in some detail.

“Such alternatives are possible for Kalkaroo because of a combination of two unique physical characteristics of the deposit, namely, a distinctive and mappable vertical zonation in mineralisation types and the exceptionally long strike of the main orebody,” he said.

“At current metal prices and exchange rates the conceptual financial models indicate that in both cases the project can generate positive economic returns after return of all investment capital.

“With significant gold credits Kalkaroo has a natural hedge because prices of these two metals often move in opposite directions in response to the same external economic factors, as has happened over the past few months.”

Giles said the company would target the start of production at Kalkaroo in the second half of 2016 as the Portia mine was winding down.

Both projects are near Broken Hill.

Kalkaroo has a resource of 620,000t copper and 2 million ounces of gold, compared to the much smaller Portia project with a resource of around 70,000oz gold.

Shares in Havilah dropped 4.6% to A20.5c.