PERTH (miningweekly.com) – An expansion study of the Goongarie nickel/cobalt project, in Western Australia, has significantly improved the value, the rate of return (IRR) and the payback period of the project, compared with the previously released prefeasibility study (PFS), ASX-listed Ardea Resources said on Tuesday.
The expansion study considered a 2.25-million-tonne-a-year operation, compared with the 1-million and 1.5-million tonnes considered in the PFS.
The one-million-tonne-a-year operation is expected to require a capital investment of A$599-million to develop a mine delivering 5 500 t/y of cobalt sulphate and 41 500 t/y of nickel sulphate over a mine life of 25 years.
Based on the one-million-tonne-a-year base case scenario, the Goonarrie project would have a post-tax net present value (NPV) of A$1.04-billion and an internal rate of return (IRR) of 25%, with C1 cash costs estimated at $0.42/lb nickel metal, after cobalt credits.
Ardea said that the expansion study found that production could increase to 10 000 t/y of cobalt sulphate and 81 000 t/y of nickel sulphate over an initial 25-year mine life, with the pre-tax NPV increasing to A$3.1-billion and the post-tax NPV to A$2.3-billion. The post-tax IRR also increased to 27%.
The expanded project is forecast to require an initial capital investment of A$1.165-billion, inclusive of a 20% contingency, and will have life-of-mine C1 cash cost of around $4.63/lb nickel metal, before cobalt credits.
“We are pleased with the results of this expansion study as it highlights the upside potential of Goongarrie and its competitive economics of scale,” said Ardea executive chairperson Katina Law.
“The primary goal of the company is to determine a cost effective start-up scenario and also provide an upside case more suited to a financier or partner seeking a long-life, lower cost, sustainable production base in a stable jurisdiction.
“The results have shown the benefits of scale, demonstrating Goongarrie as a unique battery metals project that can become a significant global producer over a long life.”
The 2.25-million-tonne-a-year base case could also be further expanded, Law said, using modular processing trains to reflect the true scale of the project.
Further, the on-site neutraliser source also contains nickel and cobalt mineralisation, which could further reduce operating costs and produce up to an additional 10% production of nickel and cobalt sulphates. Further upgrade options also include scandium production, high purity alumina production and in-pit neutraliser optimisation.
Ardea is now undertaking definitive feasibility programmes, including a 7.5 t pilot run.