PERTH (miningweekly.com) – Junior Pacific Nickel is hoping to start direct shipping ore (DSO) production at its Kolosori nickel project, in the Solomon Islands, late in the third quarter of this year, subject to financing and contractor mobilisation.
The company on Thursday told shareholders that following the completion of the definitive feasibility study (DFS) earlier this year, the Kolosori project had now advanced to the project execution stage.
The DFS estimated that the project would require a capital investment of $21.5-million to produce up to 1.5-million tonnes a year of DSO over an operating mine life of three years and total operating cost of $31/t of ore.
The study estimated that the project would have a post-tax net present value of $64-million and an internal rate of return of 156% on the base-case scenario of mining 3.8-million tonnes of ore a year.
“Given the outcome of the DFS, which confirms the strong economic viability of the Kolosori nickel project, Pacific Nickel Mines is pleased to confirm that the project has moved into an execution stage and critical path construction work has commenced pending finalisation of financing facilities being offered by Glencore International,” said Pacific Nickel CEO Geoff Hiller.
Glencore last year inked a non-binding indicative term sheet to provide a $22-million pre-export finance facility, along with a four-year offtake arrangement for all of the production from the Kolosori nickel project.
These facilities remain subject to Glencore completing its final due diligence, approval of the Kolosori mining licence, credit approvals and full documentation. As part of this agreement, Glencore has been granted an exclusivity period from the date of the non-binding indicative term sheet until 120 days after the delivery of the Kolosori DFS.
Glencore is currently finalising its technical review of the DFS.
“The company believes that the project holds relatively low technical risk and that capital payback will be achieved in under 12 months. To achieve the outcomes indicated in the DFS, pre-production funding of $21.5-million is required. The company has employed Blackbird Commodity Partners as its corporate adviser to proceed with the implementation of a project financing offered by Glencore on a non-binding indicative basis. The financing will provide a $22-million senior secured debt facility with a three-year repayment term. This debt facility remains subject to Glencore completing its final due diligence, completion of full documentation and receipt of various approvals, including, most importantly, an export permit,” said Hiller.
“The company anticipates that the Mines and Minerals Board will meet in early March to consider its application for an export permit.”
Meanwhile, in anticipation of the Glencore financing becoming available for drawdown, Pacific Nickel will proceed with discussions with barging and mining contractors.
The company said on Thursday that when the DSO loadout wharf was built, the mining contractor mobilised and haul road to the mining area completed, the Kolosori nickel project was expected to ramp up to full production of around 1.5-million wet metric tonnes a year of DSO nickel during 2023.
Mining DSO operations are expected to commence late in the third quarter of 2023 subject to financing and contractor mobilisation.
The company will be seeking to increase the mine life of the project through further exploration to convert current inferred resources of approximately two-million tonnes that are not included in the financial model, into indicated resources, and carry out drilling on the new areas identified in the exploration resource target of 2.5-million tonnes to 4-million tonnes at between 1.2% to 1.6% nickel.