THE BOURSE WHISPERER: Cove Resources has received the results of a recently completed Scoping Study conducted at the company’s recently acquired Koivu titanium project located in Finland.
According to the company the independent study produced positive results, which it said demonstrate the potential of the Koivu titanium project to be a viable long term project with a 20 year operational life.
“The Scoping Study, which has essentially been completed during the Due Diligence period for the acquisition of the Koivu titanium project confirms the viability of the project and its genuine runway to production,” Cove Resources managing director Garry Hemming said in the company’s announcement to the Australian Securities Exchange.
“The independent study has been completed using leading industry companies and consultants, and confirms the technically and financially viability of the Koivu titanium project.
“The project is forecast to have strong operating margins that should deliver significant cash flow to the company over a long operating life.”
Based on the results of the study, Cove has confirmed it is immediately commencing a Bankable Feasibility Study (BFS) with completion planned for second quarter 2013.
The company also indicated it has commenced discussions with potential titanium off-take partners.
Koivu titanium project location and titanium plants in Europe. Source: Company announcement
Cove considers the development of the Koivu titanium project will position the company as a significant, long-term supplier of quality titanium concentrate into the European market.
The company anticipates having a competitive advantage due to the low freight costs for delivery of titanium pigment concentrate into Europe versus distant suppliers from Australia, India and Africa.
Highlights from the study results include:
– Confirmation of the technical and financial viability for the proposed development of the Koivu project;
– Existing resources can support a 1.6 million tonnes per annum operation over a 20 year operational life;
– Confirmed ability to produce titanium concentrate at 250,000tpa and magnetite at 48,000tpa plus apatite;
– Estimated direct capital expenditure of US$57.6 million;
– Net Present Value of US$131 million and an Internal Rate of Return of 32 per cent (pre-tax, 10 per cent real discount rate, 100 per cent equity, direct and indirect capital costs plus 35 per cent capital expenditure contingency);
– Operating Costs of $110.50 per tonne of Ilmenite Concentrate after magnetite by-product credits; and
– Annual operating margin of A$28.63 million.