FYI Resources Ltd (ASX:FYI) (FRA:SDL) contractor GR Engineering Services Limited (ASX:GNG) has started work on a fully-funded definitive feasibility study (DFS) for the Cadoux Kaolin Project in Western Australia.
The study for FYI’s wholly-owned project will build on FYI’s GR-produced September 2018 pre-feasibility study which modelled an 8,000-tonne-a-year production scenario for a high-value, ultra-high grade (>99.99%) alumina product suitable for export.
FYI's mine plan
The inland project, northeast of Perth and southeast of Geraldton, had a net present value (NPV) US$506m (10% discount rate).
Cadoux project’s internal rate of return (IRR) of 46% and earnings before interest, tax, interest, depreciation and amortisation (EBITDA) of US$128 million a year, based on development capital expenditure (capex) of US$180 million.
The capex and key financials pus the estimated project payback at 3.6 years.
Cadoux project’s reserves are 2.9 million tonnes grading 24.4% aluminium oxide.
FYI managing director Roland Hill said: “The Cadoux Kaolin Project PFS demonstrated outstanding project metrics and absolutely warrants the highest standard of engineering.
“We believe as a result of the team that we have assembled we are well placed to commence construction in line with our project development schedule next year.
“GR Engineering delivered a fantastic result with our PFS and based on the success of that outcome we are more than pleased to have the continuity with them through the completion of the bankable feasibility study.”
The DFS is expected to be completed by mid-2019, with construction currently planned for the December 2019 financial quarter.
A schematic of FYI’s key milestones timeline ahead of completing its bankable feasibility study
WA-based FYI will undertake a number of key activities over that period, including: preparing project risk mitigation studies, continued work on permitting approvals; Kwinana refinery location site-selection activities; continued project financing and strategic funding discussions; and advanced customers and offtake party discussions.
FYI’s DFS contractor, Australian engineering services company GR Engineering, has completed more than 160 feasibility studies, with its expertise in HCl precipitation and leaching being a particular drawcard for FYI.