Platina Resources Ltd’s (ASX:PGM) definitive feasibility study (DFS) has confirmed the viability of a simple, low-strip ratio, open-cut mining operation and processing facility producing scandium oxide at its flagship Platina Scandium Project (PSP) in New South Wales.
Key project parameters
The positive DFS demonstrates the opportunity to create substantial long-term shareholder value at a manageable capital cost.
Highlights of the DFS include:
• Robust financials
The DFS demonstrates a very robust financial case for PSP.
Based on a mine life of 30 years, the project generates an after-tax net present value in real terms (8% discount rate) of $234 million, post-tax IRR (internal rate of return) of 29% and a payback period of 5.3 years.
The financial model incorporates an average scandium oxide price of US$1550/ kilogram over the life of the project.
Based on market research and discussions with end-users, Platina believes this is the price necessary to drive wide-scale adoption of scandium in alloys.
• Low capital expenditure
The DFS is based on a processing plant designed to initially produce 20 tonnes per year of scandium oxide at a capital cost of $67.8 million, expandable to 40 tonnes/year of scandium oxide for a very low incremental capital cost of $15.6 million, as market demand for lightweight aluminium-scandium grows.
Forecast supply and demand for scandium oxide
• High-grade, large resource base
The strength of the PSP is the very large and high-grade scandium resource, which is amenable to simple, low-cost, open-cut mining techniques at a low waste to ore ratio (1.9:1).
Platina has also delivered a 5% increase in ore reserves, following on from the resource upgrade delivered in August 2018.
PSP total ore reserve
The DFS assumes that 33% of the available ore reserves are mined over 30 years, and additional ore reserves resources could provide for decades of additional production or further production expansion.
• Access to infrastructure
The processing facility will utilise an existing industrial site in Condobolin, New South Wales.
Location of PSP
This unique site provides access to existing infrastructure – labour, water, power, rail, and sealed roads – which results in lower capital costs and simplifies the permitting and approvals process.
• Conventional, well-tested process route
Ore mined at Red Heart will be processed through a conventional high-pressure acid leach (HPAL) circuit to produce 99.99% high-purity scandium oxide.
The process methodology has been extremely well tested through bench and pilot scale test work to confirm operating and capital estimates for the DFS.
Once all the minerals are in solution from the HPAL process, recovery is achievable at relatively low incremental cost, thus providing a potential future opportunity to generate cobalt, nickel, platinum and aluminium products (to make high purity alumina) and generate additional cash flow.
The opportunity for scandium alloys
Platina managing director Corey Nolan said: “We are very pleased with the technical and commercial outcomes of the DFS and the compelling business case to develop the Platina Scandium Project.
“While the solid oxide fuel cell industry has been the dominant consumer of scandium in recent years, scandium’s greatest value lies in the functional properties it imparts when alloyed with aluminium.
“When used in combination with other common aluminium alloys, scandium can produce stronger, heat tolerant, weldable aluminium products.
“These products are being increasingly incorporated into transportation applications for light-weighting (electric vehicles) and lowering fuel efficiency requirements.
“The company’s strategy is to capitalise on this significant market opportunity and bring the Platina Scandium Project into production as quickly as possible.”
The next steps for project development include:
• Progress permitting and land access by submitting a mining lease application (MLA) for the mine site (this is currently in progress);
• Progress landholder lease or land purchase negotiations for the mine site properties;
• Prepare separate EIS’s (environmental impact statement) for the mine site and the plant site, planned to be completed around mid-2019;
• Prepare separate development applications for the mine site and the plant site;
• Progress marketing activities and sign offtake agreements for scandium production offtake; and
• Raise the debt and equity funding to execute the project.