Future Battery Minerals has dropped a scoping study showing a clear pathway to become a big time nickel player in WA. Pic via Getty Images.
Mining
Future Battery Minerals will move quickly to a pre-feasibility study on its Saints Nickel Project after a scoping study laid out a pathway for the junior to become one of the few class 1 nickel sulphide suppliers in Tier-1 jurisdiction of Western Australia.
The study, released to the ASX today, shows it could cost as little as $8.6 million to bring its Saints project, which boasts over 20,000t of nickel metal at an average grade of around 2.3% Ni, into production.
Located just 65km northwest of Kalgoorlie and 7km east of the Goldfields Highway, the project looms as a low risk entry point for Future Battery Minerals (ASX:FBM) into the electric vehicle supply chain.
Just 15km north of the famous Scotia nickel mine, which produced 30.800t at 2.2% nickel until its closure in July 1977, Saints will be one of the few nickel sulphide resources in WA ready for development in the coming years as demand from battery makers for clean high grade nickel sulphides picks up.
Centred around twin box cut and decline developments at the St Patricks and St Andrews deposits, met testwork shows FBM could deliver a saleable concentrate through a third-party toll treater of 10-14% nickel grade, with recoveries of 80-87% nickel, 95% copper and 84-92% cobalt.
As opposed to new developments which could require billions in funding to get off the ground, FBM estimates funding in the order of $10-12m would be required to underpin the construction of the Saints project.
“We are extremely pleased with the positive Scoping Study results and see this as a significant step forward in de-risking the Saints Nickel Project,” FBM executive chairman Mike Edwards said.
“When the Company commenced the Study, the aim was to understand the economics of the existing Resource and the potential to commercialise and fund further exploration from the base of underground development.
“The free cash flows generated by a simple and short-term underground mining operation of the existing high-grade Resource now provides the Company with the confidence to undertake a Pre-Feasibility Study (PFS) and to continue exploration work.
“However, the Project provides substantial upside if current nickel prices persist or if exploration successfully discovers further resources at depth to potentially extend the life of mine.”
One of the attractive aspects of the study is the 12 month payback period on the initial investment, part of a five year initial mine life.
The project carries a pre-tax NPV of $55.7m and incredible internal rate of return of 362%.
Mining majors regularly sanction projects with as little as 15-20% IRR.
FBM is well located when it comes to third party processors, with Poseidon Nickel’s Black Swan plant and BHP’s Kambalda concentrator just down the road.
Further north is IGO’s new Cosmos operation and BHP Nickel West’s Leinster and Mount Keith plants, with its Kalgoorlie nickel smelter and Kwinana refinery also in the neighbourhood.
At life of mine prices of US$24,160/t nickel, US$8300/t copper and US$37,460/t cobalt, the project would deliver strong returns at current prices for the collection of in demand battery metals at an operating cost base of just $8.30/lb of nickel metal.
In another vote of confidence for the rigour of the scoping study, around 70% of the life of mine tonnes would come from indicated resources.
At a cut-off grade of 1% nickel the Saints deposits boast 553,000t of indicated JORC resources at 2.5% nickel, 0.19% copper and 0.08% cobalt for 13,563t Ni, 1058t Cu and 433t Co.
On top of that are inferred resources of 358,000t at 2.1% Ni, 0.14% Cu and 0.06% Co for 7432t Ni, 513t Cu and 198t Co.
As flagged by Edwards, FBM plans to move to a PFS and then a definitive feasibility study to further define its development requirements and support a potential mix of debt and equity funding options.
The company says further optimisation work will be carried out to reduce its CAPEX and OPEX costs.
“OPEX and CAPEX costs are based on similar sized operations in the Leinster-Kalgoorlie-Kambalda region, but these costs will be validated in further studies by developing detailed zero-based costs estimates or by engaging with a suitable sized contractor to provide the cost inputs for the PFS and DFS,” the company said.
The explorer is also looking into ore sorting as a way to bring more tonnes into the mine plan and reduce the impact of waste dilution to boost the project’s profitability.
This article was developed in collaboration with Future Battery Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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