TORONTO (miningweekly.com) – Royal Nickel, which is working to develop the Dumont nickel project in Quebec’s Abitibi mining camp, on Monday announced a bankable feasibility study had demonstrated a technically and economically sound project with an after-tax net present value (NPV) of $1.1-billion, when applying an 8% discount.

The report had also found the nickel/cobalt/platinum group metals project was expected to carry a total price tag of $2.84-billion to construct; however, the first phase would cost an expected $1.2-billion. The project would have an after-tax internal rate of return of about 15%.

Royal Nickel said the project was expected to be a low-cost operation, with nickel production slated to cost $4.01/lb during the initial phase of operations, and $4.31/lb over the expected 33-year life-of-mine. The projected costs placed the operation among the lower-cost nickel producers in the world.

The feasibility study also resulted in an 11% increase in the world's third-largest nickel reserve to 1.2-billion tonnes containing 6.9-billion pounds of nickel to support a 33-year project life, including 1.3-billion pounds of proven reserves.

The Dumont project also contains one-million ounces of platinum-group metals, mainly comprising platinum and palladium reserve.

Royal Nickel added that when in production, Dumont was expected to be one of the largest base-metal mines in Canada and one of the top five sulphide nickel producers globally, targeting production of more than $27-billion of nickel over 33 years, based on current reserves alone.

The feasibility study estimated initial nickel production of 73-million pounds a year, which would increase in year five to a yearly average of 113-million pounds for the remainder of the 20-year mine life.

The Dumont project would be a conventional openpit mine/mill operation, using conventional drilling, blasting and loading with a combination of hydraulic and electric rope shovels and truck haulage. The mine is designed to produce ore at a rate of about twice the capacity of the mill, which would serve to mitigate the risk of feed shortages and allow for the highest-value material to be processed in priority.

As a result, an ore stockpile would be generated to continue to feed the mill for an additional 13 years at the end of the mine life, with the tailings deposited in the openpit.

"With our economically and technically sound feasibility study completed, I look forward to accelerating project discussions with potential partners on a financing package that will allow Royal nickel to rapidly advance the project into the construction stage following the anticipated completion of the main permitting process by the middle of next year," president and CEO Tyler Mitchelson said.