Bulk: BCI Minerals polishes the numbers for its WA salt and potash project
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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.
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 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).
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