PERTH (miningweekly.com) – The board of ASX-listed Mincor Resources has approved the development of the A$68-million Kambalda nickel operation, in Western Australia, after securing a A$55-million project debt facility from two tier-1 international banks.
The credit approved term sheet with BNP Paribas and Societe Generale will have a 3.75-year tenor and an interest rate of 3.7% a year, with the debt facility expiring at the end of September 2024.
The facility will require the mandatory hedging of some 5 500 t of nickel at a price no less than A$17 000/t, split into two tranches, with the hedging of the first 3 400 t a condition precedent to first drawdown, and the balance of the hedging due prior to the start of production.
Mincor told shareholders on Thursday that the facility, along with the company’s existing cash reserves of more than A$100-million, would allow the company to efficiently execute the delivery of its nickel restart plan in line with a definitive feasibility study (DFS), delivered earlier this year.
The DFS confirmed the potential for Kambalda to produce 63 000 t of nickel-in-concentrate over a five-year period. The initial five-year operation considered in the DFS is based on 2.5-million tonnes of ore, grading 2.9% nickel for 71 000 t of contained nickel-in-ore and 5 000 t of copper-in-ore respectively.
Based on the forecast nickel price of A$10.20/lb, the project is expected to have a net present value of A$305-million and an internal rate of return of 98%, with earnings before interest, taxes, depreciation and amortisation reaching A$585-million over the life of the project.
“We are now on the cusp of realising our vision to resume profitable and sustainable nickel sulphide mining in the Kambalda district, and to do so in an environmentally responsible and ethical manner that will see this great nickel province return to the forefront of Class 1 nickel production globally,” said Mincor MD David Southam.
“We are doing this at a particularly exciting time in the nickel market as a new wave of nickel demand emerges, driven by the electrification of the global transport fleet and the rapid growth of the lithium-ion battery industry globally. These trends have only accelerated in recent months, spurred on by post-Covid government stimulus programmes, and I expect that our production restart timetable will be well aligned with current market trends.”
With all the required environmental and state government permitting in place, Mincor is anticipating that mobilization will ramp up over the coming weeks, and mine development and surface construction will be under way by the December quarter.
Ore production is targeted for early in the December quarter next year, and first ore delivery to the BHP Nickel West Kambalda concentrator, and first nickel concentrate production, is expected in the March quarter of 2022.
The operation is expected to generate some 200 jobs.