BCI Minerals (ASX:BCI) is jumping straight into a definitive feasibility study after it bolstered the economics for its Mardie salt and potash project in Western Australia.

A pre-feasibility optimisation study (PFS) investigated the potential to increase salt output to 4 million tonnes per annum (Mtpa) from 3.5Mtpa, and sulphate of potash (SOP) production to 100,000tpa from 75,000tpa.

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SOP is one of two commonly used fertilisers.

Muriate of potash (MOP) is the most common, making up around 90 per cent of the world’s potash, and is used on a variety of crops. However, the more chloride-sensitive crops like avocados, coffee beans and cocoa require SOP which fetches a premium over MOP.

The planned increased production will double the mine’s operating life to 60 years and reduce the cash costs of the salt product by 19 per cent to $16 per tonne and the sulphate of potash product by 16 per cent to $211 per tonne.

As a result, the PFS estimated the Mardie project would have a pre-tax net present value (NPV) of $560m, internal rate of return of 20 per cent and annual EBITDA (earnings before interest, tax, depreciation and amortisation) of $155m.

NPV and IRR are metrics used to assess the profitability of a project. The higher the NPV and IRR, the more profitable a project will be.

“The recent approval by the minister for ports for an export facility at the Mardie project site and PFS flowsheet optimisation work resulting in higher production targets, support important amendments to our DFS scope,” managing director Alwyn Vorster said.

“The PFS optimisation study has shown these amendments will deliver lower operating costs and improve the overall project economics.”

With the salt and SOP now set to be exported via a port at Mardie, it eliminates all road haulage costs.

Vorster said the Mardie mine is expected to be cost competitive with existing large WA salt operations owned by major companies.

“Given SOP is a by-product of salt production and its location on the coast, Mardie should logically have a SOP on-ship cost of $50-100/t lower than any other WA SOP projects that are located 800-1,000km from their preferred port,” he said.

BCI is now working on a DFS, which is slated for completion in late 2019.

Miners usually undertake up to four different types of studies to see whether or not a resource can be mined economically. These are – in order of importance — scoping, PFS, DFS and bankable feasibility (BFS).

 

In other bulk mineral commodities news:

Mineral sands miner Astron Corporation (ASX:ATR) has started commissioning its 150,000tpa titanium dioxide processing plant in China.

Titanium dioxide is a white pigment used in paints, fabrics, plastics, paper, sunscreen, food and cosmetics.

At one point American doughnut giant Dunkin’ Donuts even used titanium dioxide to make the powdered sugar on its donuts appear whiter.

Astron said it had entered into pre-sale arrangements for final products with a number of customers and had started filling these orders throughout the commissioning process.

Coal explorer Resource Generation (ASX:RES) is working to wrap up the documentation for its $US2.5m ($3.6m) loan from major Singapore-listed commodities trading house Noble Group.

The company wants to drawdown the cash as soon as possible. The funds will tide Resource Generation over until it can secure funding to build its Boikarabelo mine in South Africa.

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