Australian Mines Limited (ASX:AUZ, FRA:MJH, OTCMKTS:AMSLF) has released a bankable feasibility study (BFS) for its Sconi Cobalt-Nickel-Scandium Project in Queensland, valuing the project at $697 million.
The Australian Securities Exchange returned the company’s securities to quotation at 1.42pm market time.
Australian Mines' metrics for the Sconi project at Greenvale in Queensland
Three open pits would be constructed under the project along with a processing plant with annual ore processing capacity of 2 million tonnes.
The Sconi definitive feasibility study estimates life-of-mine revenues of about $512 million a year, with average earnings before interest, tax, depreciation and amortisation (EBITDA) put at $295 million a year.
The project’s net present value (NPV8) is $697 million at an 8% discount rate.
Its after-tax internal rate of return is 15%, with a 5.2-year payback period on a US$974 million total capital expenditure (capex).
Sconi mine’s construction capex is USS$31 million, with US$110 million of contingencies.
Its processing plant capex is US$730 million, with US$103 million of non-process capital costs.
A process diagram for Sconi project
Australian Mines managing director Benjamin Bell said, “The Sconi BFS demonstrates robust project and financial metrics.
“Capital costs (are) in line with Australian Mines’ prediction for the processing plant, while production volumes and specifications are within the range sought by our offtake agreement with SK Innovation.
“The project also benefits from strong annual revenues across the life of mine and a relatively short payback period.”
South Korean global battery manufacturer SK Innovation Co Ltd (KRX:096770, KRX:096775) has an offtake agreement for 100% of expected cobalt and nickel production from the Sconi project.
The managing director highlighted the timing of the company’s acquisition of the Sconi project after a strategy re-set two years ago when it also picked up the Flemington Cobalt-Nickel-Scandium Project in New South Wales.
Bell said, “Our acquisition timing proved spot-on and now, two years later, we believe the project is well on track to move to the next stage in project funding negotiations.
“I am very pleased to be in a position to release the BFS on the Sconi project and look forward to implementing the next steps on the path towards production of what are increasingly in-demand and essential commodities for the manufacture of lithium-ion batteries used extensively in electric vehicles and energy storage applications.”
A year ago, the company bagged $20 million with an oversubscribed share placement designed to fund it to a final investment decision on Sconi.
The Queensland project is at Greenvale where 15,000 tonnes cobalt and 327,000 tonnes nickel were mined historically at Greenvale Nickel Mine and Brolga mine.