THE BOURSE WHISPERER: BCI Minerals (ASX: BCI) reported results of a Pre-Feasibility Study (PFS) completed on the company’s 100 per cent-owned Mardie Salt and Sulphate of Potash (SOP) project in Western Australia.
BCI Minerals declared the PFS to have confirmed the technical and financial viability of the Mardie project, establishing a positive business case for production of 3.5 million tonnes per annum of high purity industrial salt and 75,000 tonnes per annum of fertiliser grade SOP.
The project design to emerge from the study maximises the attributes of Mardie’s coastal location and large area of flat land with low permeability, whilst minimising its impact on the coastal environment.
BCI Minerals emphasised industrial salt has an attractive long-term demand outlook in Asia, driven by expected growth in the chlor-alkali industry, with a net supply gap equal to approximately seven Mardie-sized projects anticipated to emerge over the next decade.
SOP fertiliser, it said, also has a strong demand outlook linked to an increasing Asian population driving food demand, lifestyle changes requiring high quality food, and the requirement for environmentally friendly fertilisers delivering high crop yields.
The Mardie PFS demonstrates a pre-tax NPV of $335 million, IRR of 20 per cent and annual EBITDA greater than $100 million, based on a salt price of US$30 per tonne FOB and SOP price of US$500 per tonne FOB.
Total capex of $335 million will need to be spent to reach full production of both salt and SOP, comprising $248 million for salt plus incremental capex of $87 million for SOP.
BCI indicated it now intends to conduct a Definitive Feasibility Study (DFS), targeting completion during 2019.
“BCI gained ownership of the Mardie tenements at minimal cost in 2012 (as Iron Ore Holdings Ltd) and the team has now delivered an innovative and attractive project solution through the PFS at relatively low expenditure,” BCI Minerals managing director Alwyn Vorster said in the company’s announcement to the Australian Securities Exchange.
“The attractive projected investment returns of greater than $300 million pre-tax NPV, EBITDA of $100 million per annum, and potential to be a low-cost salt and SOP producer, make Mardie a compelling project for BCI to advance through the final feasibility study phase towards development.
“Availability of large areas of suitable land and securing environmental approvals are key barriers to entry in this industry, and BCI is confident that, through our positive engagement with authorities and our approvals track record, Mardie is well placed to secure key development approvals by the end of 2019.”