Proactive Investors - Run By Investors For Investors
Why invest in CZI?
Cassini Resources Ltd: DEEP DIVE
OVERVIEW

Cassini Resources progresses PFS for West Musgrave JV with OZ Minerals

CZI and Oz Minerals intend to confirm the West Musgrave Nickel-Copper-Cobalt Project's potential in the June half-year.
West Musgrave project in Western Australia on a map
OVERVIEW: CZI The Big Picture
West Musgrave has been labelled the largest undeveloped nickel-copper sulphide project in Australia
  • A West Musgrave project PFS is expected by the end of the June quarter and will focus on the Nebo and Babel nickel-copper sulphide deposits 
  • Cassini’s JV with OZ is expected to see the nickel-copper-cobalt project advanced to a decision to mine for the Nebo-Babel deposits
  • OZ’s funding and development capability will hold Cassini in good stead as West Musgrave is progressed
  • The company has a priority list of other exploration projects in WA

What does Cassini Resources do?

Cassini Resources Ltd (ASX:CZI) (FRA:ICR) specialises in base and precious metals exploration and development in Australia. It is run by managing director Richard Bevan, a corporate leader of more than 21 years who boasts 11 years experience chairing companies in the services and mining industries.

What does Cassini Resources own?

The key asset is the West Musgrave joint venture project with OZ Minerals Limited (ASX:OZL) in Western Australia.

West Musgrave project hosts more than 1 million tonnes of contained nickel and 2 million tonnes of contained copper in resource.

Cassini picked up the project from mining major BHP Group Ltd (ASX:BHP) (LON:BHP) (NYSE: BHP) (SWX:BHP) (OTCMKTS:BHPLF) in 2014 and recruited OZ as a JV partner in October 2016 to fast-track development of the project.

OZ’s three-stage earn-in/joint venture agreement is worth $36 million.

Since inking their deal, the partners have progressed West Musgrave’s Nebo-Babel deposits through a positive further scoping study (FSS) in November 2017.

The JV’s study showed a low-cost, large-scale open pit operation and a long mine life with the development of the Nebo and Babel nickel-copper sulphide deposits.

West Musgrave Nickel-Copper-Cobalt Project’s economics were positive, with nickel net direct cash costs (C1) costs in the lower third and copper C1 costs in the bottom quartile.

Processing capacity would be more than 10 million tonnes a year for an initial life of mine (LOM) of 8 years.

Average yearly LOM production would be 20-25,000 tonnes for nickel, 25-30,000 tonnes for copper and 700-1,000 tonnes for cobalt.

C1 cost of nickel in concentrate would be US$1.30-1.60 a pound while C1 cost payable copper main would be US$0.20-40 a pound.

Pre-production capital required would be A$730-800 million to produce an average LOM after-tax average net cash flow of $120-150 million.

The after-tax internal rate of return (IRR) was 20-25 for an after-tax project payback of about 3-4 years.

Cassini and OZ are undertaking a pre-feasibility study (PFS) on the Nebo-Babel deposits as well as a regional exploration program at West Musgrave.

The study is expected by the end of the June quarter.

OZ and Cassini's JV will enable the project to be advanced to a decision to mine for the Nebo-Babel deposits, as Cassini leverages OZ’s funding and development capability.

Cassini holds 49% of the development project to OZ’s current stake of 51%.

The committed partner stepped up its stake last quarter after spending $22 million and meeting its earn-in milestones eight months early.

OZ can earn into a stake of up to 70% in the project by spending another $14 million

It is contracted to sole fund the project until a bankable feasibility study (BFS) is delivered to the partners.

Yesterday Cassini and OZ unveiled positive results from a Succoth Deposit drilling program wrapped up in the December quarter.

Significant results were: 76.3 metres grading 0.71% copper and 0.17 g/t PGE (platinum group elements) from 46.7 metres; and 92.55 metres grading 0.75% copper and 0.19 g/t PGE from 271.45 metres.

A 0.25-metre intersection of re-mobilised massive sulphide within a dolerite dyke graded 3.17% nickel, 1.41% copper and 0.22% cobalt.

Succoth deposit is a large inferred copper resource of 156 million tonnes grading 0.60% copper.

The deposit is only 13 kilometres northeast of Nebo and could supply additional feed of ore to any mining operation built at Nebo-Babel.

Future resource updates and mining evaluation at the deposit, along with optimisation work, could bring in further investment upside for Cassini shareholders.

Exploration at West Musgrave's Yappsu prospect has already identified an 80-metre zone of nickel-copper sulphide mineralisation.

Within the broader 80-metre intersection, 5.75 metres at 0.28% nickel, 0.63% copper, 0.01% cobalt, 0.30 g/t PGEs and 0.15 g/t gold was intersected from 545 metres.

A broader zone also featured 70.25 metres at 0.48% nickel, 0.44% copper, 0.02% cobalt, 0.34 g/t PGEs and 0.08 g/t gold from 555.05 metres.

Cassini has a number of other projects: the wholly-owned Mount Squires Gold Project once held by Western Mining Corporation (WMC), which lies adjacent to West Musgrave; the West Arunta 100%-held base and precious metals target near Lake McKay in WA; and the Yarawindah Brook Nickel-Copper-Cobalt Project near the Benedictine community of New Norcia, northeast of Perth, which it can take a stake of up to 80% in from Kalgoorlie prospector Mr Scott Wilson’s Souwest Metals Pty Ltd.

A $4.2 million placement to high-quality investors, including cornerstone investor Guangzhou Tinci Materials Technology Co Ltd chairman Xu Jinfu, in August last year backed the company for exploration efforts.

The company spent $4.2 million on exploration and evaluation in the December quarter, using $48,000 net cash in its operating activities.

Cassini ended the year with $4.3 million cash and expects $660,000 of cash outflows in the March quarter.

Its quarterly exploration spend outside the West Musgrave JV is tipped as $150,000.

Inflection points

  • A West Musgrave project PFS focused on the Nebo and Babel nickel-copper sulphide deposits, expected at the end of the June quarter

  • Upcoming decisions to mine for deposits at West Musgrave and its regional surrounds

  • Resource upgrades for existing deposits and resource definition work success at exploration targets

  • Success of wholly-owned projects, including Mount Squires and Yarawindah Brook

Managing director Richard Bevan highlights project’s emerging potential

“These results … support a favourable geological interpretation that has significant potential benefit for the scale of the resource at Succoth, its amenability to open pit mining and our goal of building a multi-decade mining operation in the West Musgrave,” Cassini managing director Richard Bevan said yesterday.

“The perseverance of our geological team is successfully unlocking the potential of Succoth and we look forward to further drilling success in 2019.”

Cassini executive technical director Greg Miles will deliver the final presentation today at 5.45pm on day 1 of the February 19-21 RIUExplorers Conference 2019 at Esplanade Hotel Fremantle. You can find the company at stand 21.

 

View full CZI profile View Profile

Cassini Resources Ltd Timeline

Related Articles

drill rig
March 07 2019
The company is now chaired by Dubai royal, His Highness Sheikh Maktoum Hasher al Maktoum, a Commercial Bank of Dubai board member.
gold nuggets
January 22 2019
The company has received encouraging exploration results from across its East Pilbara projects in 2018.
Gold
March 07 2019
With operations in Honduras back on track and costs coming down, Wishbone's margins are set to rise.

© 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