Razorback’s project economics dramatically improved – Royal
PERTH (miningweekly.com) – An optimisation study for ASX-listed junior Royal Resources’ Razorback iron-ore project, in South Australia, has dramatically improved the project’s economics.
A prefeasibility study (PFS) completed at the start of this year indicated a capital cost of about A$2.23-billion to develop a 6.2-million-tonne-a-year operation.
However, the optimised case indicated that production could be increased to 9.3-million tonnes a year, while capital costs could be decreased to A$1.2-billion, by reducing transport costs and by increasing the production rate from 40-million tonnes a year to 60-million tonnes a year.
Mining costs would also be reduced by minimising the strip ratio and by making use of in-pit crushers and surface miners.
As a result, the project’s net present value increased from the A$644-million estimated in the PFS to A$2.21-billion. Earnings before interest, tax, depreciation and amortisation also increased from A$187-million to A$442-million.
Royal said on Wednesday that the company would now incorporate the optimisation study results into the PFS, to define a single go-forward case to prepare for the start of a feasibility study.
This would include bringing optimisation outcomes to the PFS level costings and de-risking the assumptions made in the optimisation.
The major area of work would be the issues associated with the use of seawater in the process and formalising costing estimates for the expanded production case. This work would be subject to the availability of funds.
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