PERTH (miningweekly.com) – ASX-listed GME Resources has updated the economics and cost estimates for its NiWest nickel/cobalt project, in Western Australia.
A 2018 prefeasibility study (PFS) estimated that the project could produce 456 000 t of nickel and 31 400 t of cobalt over a 27-year mine life, based on a nameplate processing capacity of 2.4-million tonnes a year.
The PFS estimated a pre-production capital expenditure of A$966-million, with average cash unit operating costs estimated at $3.24/lb. Based on life-of-mine (LoM) price estimates of $7.25/lb of nickel and $25/lb of cobalt, the NiWest project was in 2018 estimated to have a post-tax net present value (NPV) of A$791-million and an internal rate of return (IRR) of 16.2%.
However, GME this week said that the company had now incorporated higher nickel and cobalt prices, as well as taking into account cost escalation impacts since the original PFS was undertaken.
The project’s pre-production capital cost has now increased to just over A$1.26-billion, with LoM sustaining capital increasing from A$582-million to A$742-million.
Based on a nickel price of $9/lb, and a cobalt price of $28.50/lb, the project’s total free cashflow has increased from an estimated A$3.34-billion in the PFS, to A$4.49-billion, while the post-tax NPV has increased from A$791-million to A$1.08-billion, and the internal rate of return has increased from 16.2% to 16.5%.
At a nickel price of $10/lb and a cobalt price of $32/lb, the net present value increased to A$1.58-billion and the IRR to 19.9%, while a nickel price of $11/lb and a cobalt price of $35/lb resulted in a NPV of A$2.07-billion and an IRR of 23%.
GME said this week that the outcomes of the updated PFS had resulted in the company now proceeding towards a definitive feasibility study on the NiWest project, the scope and cost of which were currently under development.