PERTH (miningweekly.com) – An updated scoping study into the Fishers East nickel project, in Western Australia, has proved the project to be financially robust, and technically low risk, ASX-listed Rox Resources said.
The updated study is based on a mining rate of 500 000 t/y, resulting in the recovery of some 7 300 t/y of nickel and around 44 100 t of nickel-in-concentrate over the six-year mine life.
The study estimated a preproduction capital requirement of around A$87-million if a concentrator is installed, but this could be reduced to A$48-million if toll milling is used.
Based on the concentrator case, Fishers East would have a net cash flow of around A$146-million, a net present value (NPV) of A$79-million and an internal rate of return (IRR) of 44%.
In the case of the toll milling operation, the project would have a net cash flow of A$102-million, an NPV of A$58-million and an IRR 55%.
“The improving nickel price outlook prompted us to re-examine the development prospects for Fishers East and the results demonstrate that we have a potentially robust nickel project both financially and technically,” said Rox MD Ian Mulholland.
“The updated scoping study shows the project can deliver significant value to Rox shareholders under both a standalone concentrator option or taking advantage of nearby toll treating opportunities, such as Leinster.”
Mulholland said that the development of a concentrator would generate strong cash flows and competitive costs, while toll treating could be undertaken with significantly lower preproduction capital costs, and only slightly higher operating costs.
In the case of the concentrator operation, the study estimated a C1 cash cost of A$4.20/lb and an all-in sustaining cost (AISC) of around A$4.80/lb, while the toll treatment option has an estimated C1 cash cost of A$4.60/lb and an estimated AISC of A$5.10/lb.
Mulholland has meanwhile said that additions to the mineable resource inventory would improve the project economics, as would the improving prospects for the nickel price, which are related to increasing demand from electric vehicle batteries and declining nickel stockpiles.
“We have recently delineated depth extensions at the Camelwood and Musket deposits, and the Sabre resource is yet to be drilled out. These extensions are likely to lead to increases to mine life and enhance project economics.”
Rox would also be pursuing other opportunities identified in the scoping study, including considering an early-stage toll mill option and the use of generated cash flow to fund the purchase and construction of a processing plant on-site, opportunities to increase the size of the resource, optimising capital cost estimates, undertaking trade-off studies on mining methods, and conducting additional metallurgical testwork to optimise and improve nickel recoveries.