Suvo lets the numbers do the talking for its White Cloud project
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Suvo has unveiled a set of numbers that underscores just how lucrative its advanced White Cloud kaolin project in Western Australia’s Wheatbelt region can be.
As a preview, try pre-tax net present value (NPV) and internal rate of return (IRR) of $705m and 113 per cent respectively on for size.
NPV and IRR are both measures of a project’s profitability.
In its scoping study, Suvo Strategic Metals (ASX:SUV) envisions White Cloud as a 25-year project with initial processing capacity of 500,000 tonnes per annum to produce 200,000tpa of refined kaolin products.
Capex has been estimated at a very palatable $68m while all-in-sustaining costs are estimated to be about $256/t, well below the anticipated product sale price of $720/t.
White Cloud is expected to generate life of mine revenue of $3.6bn, earnings before interest, taxes, depreciation and amortisation of $2.34bn and cash flow of $2.2bn.
Initial payback is expected just 12 months from the start of production.
“We are extremely pleased to present this scoping study to the market and to our shareholders as it is our intention to turn our White Cloud project into a world class, high quality, kaolin mining and processing operation capable of producing 200,000 tonnes per annum of product,” executive chairman Robert Martin said.
“The study clearly demonstrates we are on the right pathway to achieve this.”
He added that the company will immediately begin a Pre-Feasibility Study (PFS) that will allow the company to make a final investment decision on White Cloud.
There is also room for further improvement with Martin noting that the scoping study only captures a small portion of the available deposit.
“As part of our development strategy, we will contemporaneously look to upgrade and expand the current resource,” he added.
“Any further improvements to the resource could present opportunities to consider further developing plant design and potential improvements to project economics.
“The study also shows the ability to deliver significant social benefits to the local community with a construction workforce of over 250 people and full time employment of 80-90 people who we hope to secure from the local communities with many of the mining and haulage personnel to be employed during the off peak of the grain harvesting season.”
Suvo’s wholly-owned White Cloud project about 210km northeast of Perth currently has an overall resource of 72.5Mt of bright white kaolinised granite with a yield of 41.2 per cent.
This includes a higher confidence indicated resource of 29.9Mt that the scoping study is based entirely on.
Mining will consist of shallow open pit excavation on the site after harvesting in the Wheatbelt region is completed and major grain movements have ceased.
This will generate sufficient stockpiles to feed the plant continuously.
Kaolin produced from the project will be exported through Fremantle port to the high-quality paper coating, paint, pharmaceutical, catalysts and ceramics markets.
This article was developed in collaboration with Suvo Strategic Metals, 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.