PERTH (miningweekly.com) – ASX-listed American Pacific Borate and Lithium (ABR) is considering a lower cost development at its Fort Cady borate project, in Southern California.
A December definitive feasibility study (DFS) considered a three-phase construction, with Phase 1 to deliver some 82 000 t/y of boric acid and 36 000 t/y of sulphate of potash (SoP), at a development cost of $138.2-million.
The Phase 2 operation would increase production to 245 000 t/y of boric acid and 73 000 t/y of SoP, at a capital cost of $191.4-million, while the Phase 3 project would produce 408 000 t/y of boric acid and 109 000 t/y of SoP, at an additional capital cost of $186-million.
Based on the three-phased approach, the project has a mine life of some 21 years.
However, ABR on Thursday said that an enhanced DFS had considered splitting the Phase 1 operation into Phase 1A and Phase 1B, in order to conserve costs.
Phase 1A will target the production of 6 000 t/y of boric acid and 40 000 t/y SoP, while the Phase 1B project would increase boric acid production to 90 000 t/y, using learnings from the initial 6 000 t/y operation.
By splitting Phase 1 into two separate phases, preproduction costs for the project have reduced from $138-million to $36.8-million, while Phase 1A would still deliver a net present value (NPV) of $224.7-million and an internal rate of return (IRR) of 58.3%.
The addition of Phase 1B would increase the NPV to $385.3-million, and the IRR would reach 36.4%.
“We are delighted with the enhancement of the DFS to include a low capital cost starter project that works on a standalone basis,” said ABR CEO Michael Schlumpberger.
“We now have preproduction capital expenses of only A$36.8-million and a pathway to Phase 3 that has an annual earnings before interest, tax, depreciation and amortization (Ebitda) in the first full year of production of over $340-million.”
Schlumpberger said that enhancement has made the Fort Cady project easier to finance while limiting likely share dilution and preserving a massive Ebitda target in full production.
“Our ability to include such a low capital cost starter project emphasizes how unique the Fort Cady project is in the world of mining.”
The complete three-phase project is estimated to have an NPV of more than $1-billion, an IRR of 40.5%, and Ebitda expectations of some $345.4-million in the first full year of production.
ABR will now progress financing discussions and will start detailed engineering for the starter project, with the target of starting construction in the fourth quarter of this calendar year.