PERTH (miningweekly.com) – A new bankable feasibility study (BFS) into the Thunderbird mineral sands project, in Western Australia, has simplified the process flowsheet, resulting in lower capital costs and reduced margins.
ASX-listed Sheffield Resources on Thursday reported that joint venture vehicle Kimberley Mineral Sands (KMS) had completed the new BFS, which estimated a mine life of 36 years and average sales of 1.42-million tonnes a year of rare earths.
The updated study had removed the low temperature roaster (LTR) to further simplify the flowsheet.
The new BFS estimated a capital requirement of A$361-million for the Stage 1 operation, which would have a process rate of 1 085 t/h, with total funding requirements for Stage 1 estimated at A$484-million.
The new BFS compared with a 2019 study which estimated an initial capital cost of A$392-million and total funding requirements of A$478-million for the same throughput rate, with the mine life estimated at 37 years.
The new BFS estimated a post-tax net present value of A$1.28-billion and an internal rate of return of 27.5%, compared with the A$0.98-billion and 24% estimated in the 2019 studies. Earnings before interest, taxes, depreciation and amortisation have also increased from the previously estimated A$6.8-billion to A$8.1-billion, with revenues expected to reach A$15.7-billion over the life of the operation.
The two-stage Thunderbird development pathway sees the initial Stage 1 mining and processing feed rate forecast at 1 085 t/h at the wet concentrate plant (WCP), with Stage 2 doubling the WCP feed rate to 2 170 t/h targeted during Year 5 of operations.
Stage 1 and 2 of operations are estimated to produce 1.4-million tonne a year of zircon and ilmenite concentrates over an estimated 36-year life-of-mine (LoM).
Sheffield said on Thursday that ongoing supply shortages within mineral sands markets are resulting in strong demand for Thunderbird products, with approximately 80% of the KMS BFS Stage 1 revenues contracted under binding, long-term offtake agreements.
KMS is a 50:50 joint venture (JV) between Sheffield and YGH Australia Investment (Yansteel), formed in 2021 to develop the Thunderbird mineral sands project.
Under the terms of the KMS shareholder agreement, Sheffield is required to contribute A$10-million plus 50% of the remaining estimated new equity for a new estimated JV equity contribution of A$36-million, with Yansteel forecast to contribute A$26-million of new equity.
Sheffield’s cash reserve of A$5.1-million at the end of December 2021, combined with A$36-million in cash proceeds received to date from the sale of the Eneabba and McCalls projects, means that Sheffield is expected to fund 100% of the KMS new equity required from existing cash reserves.
Meanwhile, Yansteel and Sheffield previously entered into a binding LoM take-or-pay offtake agreement for 100% of the LTR ilmenite from Stage 1 development of Thunderbird, with Yansteel having a first right of refusal to purchase ilmenite from later stages.
Following the removal of the ilmenite processing circuit, including the LTR from the Thunderbird BFS flowsheet, Yansteel and Sheffield have executed an amended offtake agreement representing 100% of magnetic concentrate forecast to be produced from Stage 1, with a similar offtake right of first refusal for later stages.
Additionally, in order to minimise cost escalation risk, KMS has executed an engineering, procurement and construction contract with GR Engineering Services (GRES) for the process facilities with the fixed price of A$179.5-million.
GRES has been issued with a notice to proceed, allowing the company to start a work programme, including civil earthworks, long lead item procurement, structural steel and piping manufacture and a continuation of engineering and design activities.
Full project financing and a final investment decision on Thunderbird is expected in mid-2022.