Australian Mines forging ahead with downstream plans after scoping study release
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Battery metals developer Australian Mines (ASX: AUZ) is moving to the next stage of studies to become Australia’s one-stop precursor shop at its proposed Sconi project in Queensland.
It is poised to commence Pre-Feasibility Studies (PFS) later this year after releasing a scoping study today focused on leveraging Sconi’s unique Nickel-Cobalt-Manganese (NCM) mineral make-up to deliver a more refined and higher value Precursor Cathode Active Materials (P-CAM) product for NCM battery customers.
Australian Mines has been testing the potential to move one step higher on the EV precursor material supply chain by substituting P-CAM production for the sulphate crystallisation stage such as nickel, cobalt and manganese sulphates – the kind of battery-focused material currently being produced by BHP.
Instead, AUZ has demonstrated its capacity to deliver P-CAM products for the NCM 523, NCM 622 and NCM 811 battery chemistries used throughout the EV industry.
It comes at a welcome time for the EV industry with looming supply constraints around battery grade nickel and cobalt from 2023. This projected shortage in both nickel and cobalt creates very favourable market dynamics and further supports offtake agreements being signed by the end of the year.
This would involve replacing Sconi’s proposed nickel and cobalt crystallisation circuit with a P-CAM production facility.
Today’s study highlights the potential for Sconi to deliver significantly greater revenues and margins over the life of the project for an incremental capital and operating cost.
The P-CAM facility outlined a $104.6 million increase in capital costs and $46.8 million per year rise in operating costs by going this route.
But discounted payback is estimated to come in just 1.8 years, with consultants CRU and Ausenco estimating the company would receive US$18,800/t for its NCM 622 product and $US16,500/t for its NCM 811.
To put that into context, expected prices for nickel sulphate and cobalt sulphate would be US$3,684/t and US$15,540/t, respectively.
At 25,708tpa of NCM 811 and 4,778tpa of NCM 622 and operating costs of $1,717/t, that would generate incremental EBITDA of more than $1 billion with an NPV of $352 million.
On the back of the promising scoping results, the company said it is now moving quickly to commence a more detailed PFS, with a timeline due to be finalised in the September quarter.
This article was developed in collaboration with Australian Mines, 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.