Special Report: Northern Queensland is one step closer to getting a new generation nickel-cobalt refinery following the completion of a pre-feasibility study (PFS) on Pure Minerals’ Townsville Energy Chemicals Hub (TECH) Project.

Pure Minerals (ASX: PM1) delivered the findings of the TECH PFS, which assessed the development of a refinery in Townsville that would process ore imported from New Caledonia to produce nickel sulphate, cobalt sulphate and other co-products, on Monday, saying they demonstrated the project was “a technically sound and economically robust venture”.

Among the key measures indicating the profitability of the venture, the PFS showed a pre-tax Net Present Value of $880 million and a pre-tax internal rate of return (IRR) of 25.7%, while forecast annual revenue from the project was $279 million and annual earnings before interest, tax, depreciation and amortisation were $124 million.

Pre-production capital estimates haven’t varied much since the scoping study completed in January this year, with the refinery expected to cost US$300 million (A$441 million) plus a US$49 million (A$72 million) contingency.

This is a a significantly lower cost than some of the other nickel-cobalt ventures being planned in Australia and overseas, the lower price tag being possible because Pure Minerals has been able to scale back the production and opted to use a technology known as the Direct Nickel (DNi) Process rather than go down the High Pressure Acid Leach (HPAL) route like other companies.

“Nickel laterite projects have previously faced significant funding hurdles which have prevented development,” Pure Minerals managing director John Downie said.

“This has typically been a result of prohibitive capex requirements for plants that have been scaled up significantly in order to make it economic to process low-grade deposits using HPAL.

“The PFS demonstrates that despite the smaller scale of the TECH Project, production levels are significant, project economics are attractive and most importantly, the capex hurdle is not insurmountable.

“The combination of the DNi ProcessTM and the high-grade ore supplied from New Caledonia are the two biggest advantages and points of difference for the TECH Project.”

Recycling the process acid and extracting most of the metallic minerals as co-products  results in additional revenue streams, product diversification and most importantly ensures there is a significantly lower volume of dry stackable and benign residue generated

Based on the PFS, the TECH facility would produce 26,398 tonnes of nickel sulphate, 3,097 tonnes of cobalt sulphate per year along with significant amounts of hematite, magnesia and aluminium hydroxide as co-products.

 

Plenty of scope for improvement

The company said there are multiple opportunities to improve project economics including through the production of high purity alumina from aluminium hydroxide, upgrading the hematite into a higher value product and assessing various process and infrastructure options as means of reducing capital expenditure.

These opportunities would be investigated further as part of the Definitive Feasibility Study and future pilot plant testwork and process optimisation it intends to undertake as it moves towards a final investment decision on the project.

Consistent with the Companies goal to build a new generation modern and environmentally sustainable project, all the thermal energy is supplied from the North Queensland Gas Pipeline NQGP and as the project advances opportunities to utilise renewable energy sources will be thoroughly investigated

Other activities that will be progressed over coming months include environmental studies and regulatory approval applications and engagement with end users and other parties that could lead to product offtake agreements.

The PFS was undertaken by lead engineering company Lycopodium Minerals with support from other consultants including Boyd Willis Hydromet Consulting, Xenith Consulting and Saunders Havill Group.

 

This story was developed in collaboration with Pure Minerals, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Featured Companies

You might be interested in