Proactive Investors - Run By Investors For Investors

Platina Resources’ definitive feasibility study confirms robust financials for scandium project

Post-tax net present value of $234 million and a fast payback period of 5.3 years based on average scandium oxide price of US$1,550 per kilogram.
The flagship project’s name has been changed from Owendale to Platina Scandium Project

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.

READ: Platina Resources progressing towards development at Owendale Scandium-Cobalt-Nickel Project

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.

READ: Platina Resources to develop aluminium-scandium master alloy from Owendale ore

“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.”

Next Steps

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.

View full PGM profile View Profile

Platina Resources Ltd Timeline

Related Articles

Results from Zermatt, Cortina and ML 13 will be analysed to plan a new drill campaign
April 26 2019
It has assets in WA’s Yamarna-Mt Venn region near future Gold Fields' mine Gruyere.
Lake Yindarlgooda at Riversgold’s project in the Goldfields
February 15 2019
The Eastern Goldfields is Riversgold’s focus in Western Australia while it also has ground in South Australia and Alaska.
Project area
February 12 2019
Forecast life-of-mine gold production jumps to 289,000 ounces following a new resource estimate and mine design.

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use