THE BOURSE WHISPERER: Australian Mines (ASX: AUZ) released the findings of an independent study of the company’s Sconi cobalt-nickel-scandium project in North Queensland.
Australian Mines commissioned the independent nickel and cobalt sulphate Market Study that was undertaken by commodity research specialist CRU International.
CRU forecasts that the 2025 value-adjusted business costs of the Sconi project would place it in the 1st quartile compared to other existing and proposed analogous operations globally, based on the outcomes of financial modelling Australian Mines released in its base case Bankable Feasibility Study (BFS)
Australian Mines described Sconi as a late-stage, laterite-hosted cobalt-nickel-scandium project with payable metals expected to be produced annually, on average (based on an 18-year mine life), of 8,500 tonnes of cobalt sulphate and 53,300 tonnes of nickel sulphate.
The company completed a Mineral Resource extension drilling program in late 2018 and expects to be able to release an updated Mineral Resource Estimate for Sconi in the March quarter, which will feed into an optimised BFS on the project.
“We felt it was prudent to get an updated expert view of the medium and long-term market forecasts for nickel and cobalt, and confirm our BFS modelling that pointed to Sconi being a 1st quartile low-cost producer, hence giving Australian Mines a competitive advantage if commodity prices do fluctuate in the medium term,” Australian Mines managing director Benjamin Bell said in the company’s announcement to the Australian Securities Exchange.
“CRU International is a respected commodity research firm when it comes to detailed analysis of battery and technology metals in particular, and provided deep insight into the forecast supply, demand and pricing dynamics for cobalt and nickel sulphate products.
“The Market Study serves to demonstrate that there will be a very significant opportunity for new nickel sulphate and cobalt sulphate market entrants, including Australian Mines, and the price environment is expected to be very favourable for low-cost producers.
“Sconi is on track for first production in 2021 and CRU International’s modelling of our operating expenditure versus likely competitors based on the base case BFS for Sconi is highly encouraging at a critical time for the project as we work to progress project financing arrangements.
“The characteristics of the Sconi Resources, being able to produce a high-value cobalt sulphate product alongside the larger scale nickel sulphate production, places our project firmly at the bottom of the cost curve, which of course translates to greater future profitability and insulates us from potential nickel sulphate price shocks.”