Australian Mines is reviewing the draft bankable feasibility study (BFS) for its flagship Sconi nickel cobalt and scandium project in preparation for advanced project financing negotiations.

Financing talks with several interested parties — including nine financial institutions and Australian Mines’ (ASX:AUZ) offtake partner, SK Innovation — have accelerated in recent weeks and were “well advanced”, the company said.

Australian Mines previously inked a binding agreement for Korean battery maker SK Innovation to buy up to 12,000 tonnes of cobalt sulphate and 60,000 tonnes of nickel sulphate each year from the Sconi project.

SK Innovation needs additional nickel and cobalt supply as it ramps up total battery production capacity towards 20 gigawatt-hours by 2022 — enough to power 670,000 electric vehicles.

Australian Mines shareholders can expect an update on financing during the company’s AGM in late November.

The highly anticipated BFS will be released to the market once it has been reviewed by potential funding partners and approved by the Australian Mines board.

The Australian Mines (ASX:AUZ) share price over the past year.
The Australian Mines (ASX:AUZ) share price over the past year.

AUZ boss Benjamin Bell said the company was taking “a highly conservative approach” to the financial modelling for Sconi — including commodity prices and associated revenue projections across the first 20 years of potential production, and the capital cost estimates for construction.

“Given we are planning for more than 80 per cent of total infrastructure expenditure at Sconi to be Australian content and our future off-take revenue from SK Innovation will be calculated using a US dollar base price, a lower Australian dollar actually improves the Sconi project’s economics,” he said.

The volatile Australian Mines share price is currently 4.7c; its lowest point since October last year.

The stock has traded between 1.5c and 15.5c over the past year.