PERTH (miningweekly.com) – ASX-listed Australian Mines has taken full ownership of the Sconi cobalt/nickel/scandium project, in Queensland, after striking a A$10-million cash and share deal with Metallica Minerals.
Australian Mines’ outright acquisition of the Sconi project negated an earlier earn-in agreement with Metallica, under which Australian Mines was earning a 75% interest in the project.
Under the terms of the acquisition agreement, Australian Mines would pay A$3.5-million in cash and would issue a further A$1.5-million in shares on the completion of a definitive feasibility study by June 2018.
A further A$5-million in cash or shares will be payable to Metallica following the start of commercial production from the Sconi project.
“With Metallica’s focus firmly on the development of the Urquhar bauxite project, the Sconi project has become a noncore asset, which was reflected in the earn-in agreement signed with Australian Mines in 2016,” Metallica CEO Simon Slesarewich said on Wednesday.
“This transaction represents an opportunity for Sconi to be progressed even more effectively, to the benefit of both parties.”
Slesarewich said on Wednesday that Metallica was set to retain significant exposure to the project by taking equity in Australian Mines, and having additional payments linked to commercial product.
“The cash to be received will be used to advance the Urquhart bauxite project, and potentially to assist Metallica with its strategic objective of increasing bauxite production to between five-million and seven-million tonnes annually, over the next three to five years.”
Australian Mines MD Benjamin Bell said that the acquisition of Sconi represented a landmark acquisition for the company, and reinforced its confidence in the future success of long-term mining and processing operations in Queensland.
“We continue to deliver on our strategy of becoming a leading technology metals project developer and long-term supplier of cobalt and nickel sulphates to the global battery materials market.”
He pointed out that Australian Mines was also continuing to negotiate with interested parties for the commercial sale of scandium oxide from the Sconi project, which represented a significant upside to the future project economics.
“To shore up this initial interest from end customers, we have commenced construction of a demonstration-size processing plant in Perth that we will use to process ore sourced from Sconi, and subsequently Flemington, to produce commercially saleable samples of cobalt, nickel and scandium products before the end of this year.”
With a 2 200 kg/d throughput capacity, the plant is expected to produce some 67 kg of cobalt sulphate, 500 kg of nickel sulphate and 8 kg of scandium oxide a week.
Bell added that the bankable feasibility study on the Sconi project was advancing on schedule and due for completion in April next year.
“We are on track to reach a final investment decision, given that we already have a mining lease and environmental approvals in place.”