'Ideally positioned': Why this ASX copper stock just rocketed 57%

Investors are snapping up shares in the ASX copper stock on Monday. But why?

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ASX copper stock Anax Metals Ltd (ASX: ANX) is off to the races on Monday.

Shares in the junior resource explorer closed on Friday trading for 4.4 cents apiece. The Anax Metals share price leapt to 6.3 cents in earlier trade today, putting the stock up a whopping 57%.

Following on some likely profit taking, shares in the ASX copper stock are currently swapping hands for 6.2 cents apiece, up 41%.

For some context, the All Ordinaries Index (ASX: XAO) is down 0.3% at this same time.

Here's what's stoking investor interest on Monday.

ASX copper stock rockets on project update

The Anax Metals share price is going ballistic after the company released a promising update on its joint venture Whim Creek Copper Project, located in the West Pilbara region of Western Australia.

Anax owns 80% of Whim Creek, while Develop Global Ltd (ASX: DVP) owns the other 20%.

The ASX copper stock said strengthening copper prices over the past year have added "significant momentum" to the project's near-term development and recommencement of operations.

At the current US$10,004 per tonne, copper prices are up 21% over the past 12 months.

Anax said key outcomes from its Whim Creek Definitive Feasibility Study (DFS) and Heap Leach Study based on current metal prices and exchange rate inputs have enhanced the project's economics by 32%.

The miner estimates that under the new prices and rates, the project will generate around $520 million in free cash over the planned eight-year mine life, with a pre-tax net present value (NPV) of $357 million, and an internal rate of return (IRR) of 74%.

That compares very favourably to its estimates in September 2023, with an NPV of $270 million and an IRR of 55%. Anax noted that the price assumptions used in open pit optimisations in the DFS were "markedly lower" than current commodity prices

The ASX copper stock could also be getting a boost, with management flagging the potential to increase the open pit mine life and cash flow through re-optimisation at higher commodity prices.

According to the release, the miner's Evelyn and Salt Creek copper resource extension exploration will be prioritised, while studies for a regional processing hub strategy have already started.

What did management say?

Regarding the project update sending the ASX copper stock rocketing today, managing director Geoff Laing said, "The Whim Creek asset continues to shape up as a strategic processing hub for the Pilbara."

Laing continued:

The recent increase in copper and other key metal prices has significantly enhanced project financial metrics. Anax is ideally positioned to benefit from the positive momentum building in copper demand on the back of its critical role in electrification and green technologies.

Laing said the project is "ready for near term production of key energy metals".

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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