Sheffield Resources (ASX:SFX) has released a bankable feasibility study for its Thunderbird Mineral Sands Project in Western Australia, demonstrating a financially robust and technically strong project.
Importantly, the project is forecast to generate an EBITDA of $5.1 billion over a 42-year mine life, averaging $123 million per annum.
The estimated pre-tax net present value of $676 million and a 25% pre-tax internal rate of return supports the project’s viability and provide a compelling case for financing and development.
The Thunderbird bankable feasibility study (BFS) is underpinned by one of the world’s largest and highest grade zircon and ilmenite rich mineral sands ore reserves.
97% of the first 10 years of production is scheduled from the Proved Ore Reserves, which is currently 235.8 million tonnes at 1% zircon and 3.55% ilmenite.
To achieve the forecast outcomes contained in the BFS, Sheffield will require a funding solution that delivers no less than $355 million in upfront funding.
Since the release of the pre-feasibility study in October 2015, the company has received interest from international financial and strategic investors.
Sheffield capitalised on this interest during the BFS compilation period by completing a successful $17.1 million equity raising in August 2016.
Ultimately, the company may need to pursue other value realisation strategies such as a partial sale or joint venture that would reduce its proportionate ownership of the project.
The delivery of the BFS coincides with the recent improvement in market conditions for mineral sands, particularly for sulphate ilmenite, with prices rising significantly over the past twelve months.
Importantly, completion of the BFS clears the way for delivery of the next major milestones - offtake, permitting and project finance ahead of a targeted construction start in the second half of 2017.