Australia-based exploration and mining firm Blackthorn Resources is eyeing an underground mine at Kitumba copper project in Zambia.

The company said the prefeasibility study (PFS) at the $358m project demonstrated positive potential.

Under the study, the company selected an underground operation as the preferred base case, as it offered a lower capital cost and higher capital efficiency.

Work will commence immediately on project optimisation, focussing primarily on metallurgical recovery and mining sequence that may improve economics.

The optimisation work will also be based on an updated resource that features recent drilling results and is anticipated to lead to a PFS update in early 2014.

From the PFS, the company found that project would deliver an annual run-of-mine production of some three-million tonnes to deliver 39,000 tonnes of copper.

The project is expected have a mine life of 11 years, delivering 572,000 tonnes of contained copper over the life of the development.

Blackthorn Resources managing director Scott Lowe said the completion of the PFS for the Kitumba Project, along with identification of optimisation and value enhancement potential, is ‘a milestone for the company and the latest in a series of positive developments since BHP Billiton exited the JV just two years ago’.

"We have chosen a smaller scale underground operation rather than a much larger scale open pit as this allows us to target the higher grade zone much earlier, and to avoid expensive and time-consuming pre-strip," Lowe said.

"The economic comparison clearly showed that the internal rate of return is better for the underground scenario with a significantly lower pre-production capital cost."

Work is currently underway to prepare mining licence application for submission to the Mining Ministry of Zambia.

Blackthorn said it is currently formulating a ‘Path to Production’ strategy that will incorporate management of critical financing, project implementation and organisational development risks.

Upon completion of the optimisation studies, submission of the mining licence application and strategic planning for the "Path to Production", the next phase of the project will be implementation of an investment-grade feasibility study, which is anticipated to start in early 2014.

A process to select key consultants for the next phase of feasibility study will begin soon.