THE BOURSE WHISPERER: Global mining entrepreneur Robert Friedland has his finger firmly in another Australian mineral resources pie – with two of its tastiest ingredients being the electric vehicle (EV) market and the planned establishment of what could be a game changing scandium operation. By Mark Fraser
As co-chair of the Melbourne-based Clean Teq Holdings (ASX: CLQ, TSX: QTCQX and CTEQF), the enigmatic Friedland is one of the key drivers behind the development of the Sunrise Battery Minerals Project (SBMP) in central New South Wales, where the recent focus has primarily been on sizing up an EV-friendly nickel and cobalt operation to service the global automobile sector.
Located north of Fifield around 70 kilometres north-west of Parkes, the SBMP has a current lateritic reserve of 143 million tonnes grading 0.59% nickel, 0.10% cobalt and 74 parts per million scandium.
According to Clean TeQ, Sunrise is not only one of the largest cobalt deposits outside of Africa, but is also “one of the largest and highest grade accumulations of scandium ever discovered”.
Adding to this story’s allure is the fact that recent drilling at the site further confirmed the ore body’s potential to be a giant amongst Australia’s platinum resources.
Earlier this month the company released a project execution plan (PEP) for the (roughly) $2.37 billion mining and downstream processing undertaking, which is expected to achieve annual production of 21,293t nickel and 4,366t of cobalt during years 2–11 of its initial 25 year life, and an overall 18,439t per annum of nickel and 3,179t of cobalt between years 2-25.
Some 2.5 million tonnes of Sunrise’s lateritic ores will be put through a pressure acid leach circuit on a yearly basis. The autoclaves have already been bought, while Clean TeQ has developed an in-house processing technology, known as Clean- iX®, which looks set to provide the basis for the “highly efficient extraction and purification for a range of valuable strategic metals from slurries and solutions”.
As it stands Sunrise is forecast to deliver over US$16 billion in revenue and an average annual post-tax free cash flow of US$308 million over its first quarter century of operations.
These strong cash flows, Clean TeQ believes, will result in a post-tax net present value of US$1.21 billion ($1.72 billion) as well as a post-tax internal rate of return of 15.44%.
The PEP, the company said, confirmed Sunrise’s status as one of the world’s lowest cost, development-ready sources of critical battery raw materials.
Aside from being a major supplier of nickel and cobalt to the lithium-ion battery market, the project would also provide scandium to the aerospace, consumer electronics and automotive sectors.
In terms of the first part of this strategy, the Sunrise refinery is designed to produce enough nickel and cobalt to respectively support the production of about 1,000,000 and 2 million EVs pa.
To cater for the scandium – initially recovered as a nickel and cobalt by-product in the form of hydrogen concentrate, after which it will be stored on site until required for conversion to oxide – Clean Teq plans to install a 20t refining capacity for the niche mineral during the third year of operation. This may eventually be increased to 80t per year for a (current) cost of $25 million.
According to Clean TeQ, the global supply of scandium oxide is around 10-15t pa, meaning it is expecting to become one of the market’s dominant players. The company has used a long-term scandium oxide price assumption of US$1,500 per kilogram in its PEP.
“As the scandium market grows, future investment in a dedicated resin-in-pulp scandium extraction circuit and further refining capacity offers the potential to increase by-product scandium production to up to approximately 150t pa,” the company said.
“The PEP conservatively ramps up scandium oxide sales from 2 to 20t per year over the first decade of the mine life. Clean TeQ has existing offtake heads of agreement with companies including Panasonic Corporation Global Procurement Company and Relativity Space Inc, and programs are underway with a range of additional parties to develop new light-weight aluminium scandium alloys for the aerospace, additive layer manufacturing, consumer electronics and automotive sectors.”
During early September the company also announced it had discovered an area of high-grade platinum mineralisation within Sunrise forming what it called the “newly-classified Phoenix Platinum Zone”.
Significant downhole intersections from earlier drilling campaigns included:
12m at 8.0 g/t platinum, 0.55% nickel, 0.08% cobalt and 23 ppm scandium for 96.3 g/metres platinum (from 8m);
13m at 7.1 g/t platinum for 92.2 g/m platinum (9m);
6m at 15.1 g/t platinum, 0.95% nickel, 0.16% cobalt and 170 ppm scandium for 90.3 g/m platinum (32m);
4m at 18.1 g/t platinum, 0.05% nickel, 0.01% cobalt and 27 ppm scandium for 72.4 g/m platinum (from surface), and;
14m (from 20m) at 4.4 g/t platinum, 0.73% nickel, 0.02% cobalt and 75 ppm scandium for 61.7 g/m platinum (20m).
These holes were drilled with a mix of reverse circulation, air core and calweld rigs and – with few exceptions – were not assayed for other platinum group metals.
Sunrise already hosts a significant platinum resource of 103.1 Mt at 0.33 g/t for 1.076 million ounces of the precious metal, using a 0.15 g/t platinum cut-off grade. Of this total resource, approximately 90% is in the measured and indicated categories.
According to Clean TeQ, which Friedland co-chairs with Jiang Zhaobai., this makes the ore body “one of the largest platinum resources in Australia”.
Made famous in the mining world after sizing up remote ore bodies that became the basis of some high profile deals involving Inco (the polymetallic Voisey’s Bay in Newfoundland back in the 1990s) and the publicly-listed Rio Tinto (the Oyu Tolgoi copper-gold project in Mongolia the following decade), the US-born Friedland has now had an interest in Australia’s minerals scene for two decades.
During the early 2000s his company, Ivanhoe Mines, owned the Savage River magnetite iron ore operation in north-west Tasmania before selling it off and delisting from the Aussie bourse in 2005.
Then, in 2008, the resources house relisted on the ASX to push its Cloncurry copper projects in Queensland – a corporate quest that led it to the 2008 discovery of Merlin, which at the time was touted as the world’s highest grade molybdenum-rhenium deposit.
Given this, investors will now be asking one key question: Can Friedland help overcome the many problems faced by Western Australian nickel laterite producers during the early 2000s (not to mention BHP towards the end of that decade) and unequivocally prove that Australian lateritic ores can be processed economically?