THE BOURSE WHISPERER: Clean TeQ Holdings (ASX: CLQ) announced the results of a recently-completed Pre-Feasibility Study (PFS) on the company’s Syerston nickel & cobalt project in New South Wales.
Clean TeQ declared the PFS has demonstrated Syerston has the potential to become a leading global supplier of nickel and cobalt sulphate to the lithium-ion battery industry.
The project also hosts scandium by-product credits, which are considered to provide potential for substantial economic upside.
The PFS involved a project flow sheet designed to produce high purity nickel sulphate and cobalt sulphate products specifically targeted at the fast-growing lithium ion battery (LiB) market.
Clean Teq already has non-binding offtake Memorandums of Understanding (MoUs) in place with key LiB industry customers and is in further discussions in relation to offtake contracts.
The PFS assessed the economics of an operation to process 2.5 million tonnes per annum of ore over an initial 20-year period with existing Reserves available for up to 19-years of additional mine life.
From this average annual production is expected of 18,730 tonnes per annum of contained nickel metal equivalent and 3,222 tonnes per annum of contained cobalt metal equivalent in years three through twenty of operation.
Dollar-wise the study determined post-tax NPV of US$891 million ($1,187 million) and 25 per cent post-tax IRR, assuming long term average nickel and cobalt price forecasts of US$7.50 per pound and US$12 per pound respectively, although Clean TeQ indicated sulphate product premiums represent further upside pricing opportunity.
Capital costs of US$680 million ($906 million), including US$62M (10 per cent) contingency with average C1 operating cash cost in years three to 20 of US$2.96 per pound nickel, US$0.89 per pound nickel after cobalt by-product credits or negative US$0.76 per pound nickel after cobalt and scandium by-product credits.
The inclusion of the scandium oxide (Sc2O3) by-product production of 50 tonnes per annum at US$1,500 per kilogram increases the post-tax NPV to US$1,233 million ($1,645 million) and the post-tax IRR to 30 per cent.
“The coming decades will see enormous technological disruption in global energy storage and transportation markets,” Clean TeQ co-chairman Robert Friedland said in the company’s announcement to the Australian Securities Exchange.
“But this technology revolution is interdependent – it requires the rapid development of new and reliable raw material supply chains to service these fast-growing markets.
“At its heart, Syerston’s unique mineral resource, when combined with Clean TeQ’s proprietary ion exchange extraction and purification processing platform, has the potential to service a significant portion of global demand for cathode raw material into the lithium-ion battery industry, as well as providing scandium for the next generation of light-weight aluminum alloys for transportation markets.”
The study ascertained the Syerston project to be a catalyst for regional investment and employment opportunities in central New South Wales, with peak construction workforce estimated at 850 people, and steady-state operational workforce at 335 people.
There are already key work programs, infrastructure and permits in place, while the project is located adjacent to existing road and rail line with water allocation secured and EIS approved.
Development Consent for a 2.5 million tonnes per annum operation has been previously granted.
Clean TeQ indicated it already has a Bankable Feasibility Study underway to progress engineering and design and confirm project economics.
“The PFS has demonstrated the potential for an extremely robust project, producing metals at a scale, and in a form that are becoming increasingly critical in energy and transport supply chains,” Clean TeQ CEO Sam Riggall explained.
“Market interest in the project has been very strong, and we look forward to progressively de-risking the development plan and working with potential customers and strategic partners in these supply chains.”