JOHANNESBURG (miningweekly.com) – ASX-listed Korab Resources has estimated the capital costs for its Winchester magnesite project, in the Northern Territory, at between $2.4-million and $2.5-million.

In a prefeasibility study (PFS) update for the project on Wednesday, the company said that study results showed that main components of capital expenditure were not sensitive to output capacity.

“The capacity of the project would therefore ultimately depend on any offtake or long-term sale agreements,” the company said.

Korab said in November last year that it would update the 2015 PFS to incorporate an increase in the global magnesium carbonate prices and potential changes to the mine layout. The previous PFS estimated that the project would cost some A$4-million to develop based on a conceptual mine that could operate at various capacity levels, from a 250 000 t/y to a 500 000 t/y or one-million-tonne-a-year run-of-mine capacity.

Korab stated that the updated study assumed that contractors would be used for the majority of project operating tasks, reducing capital costs by limiting the need for owner-operated equipment.

Several development variants were initially evaluated and, in the end, a two-stage, bench-by-bench development was selected as the best variant for the study.

Under this variant, estimated capital costs were significantly reduced, owing to a smaller volume of overburden to be removed prior to the start of mining, no requirement for construction and maintenance of a diversion channel, as well as reduced waste and water management requirements.

The study assessed capital and operating costs of the project supplying a direct shipping ore crushed on site to average 25 mm and screened separate fines.

The output from the quarry would consist of crushed magnesite rock, with a waste stream consisting of magnesite fines, dolomite, talc and waste rock, which would be stored on site.

The estimated ratio of coarse saleable magnesite rock to fines used in the study was 80%.

Korab is currently finalising the estimates of revenues and various additional material factors such as haulage costs, port charges, interest, debt repayment, royalties and overheads.