The ore supply agreement has been extended to 10 years, from 5, with an additional 5 year option period upon mutual agreement.
Positively, the extension of the ore supply agreement comes at a time when the value of nickel ore has been increasing and security of supply is critical.
This is important for the advancement of the Townsville Energy Chemicals Hub (TECH) Project and improves Pure’s position with regard to securing project funding.
TECH Project held by subsidiary QPM
Pure’s managing director John Downie said: “The extension of the ore supply agreement demonstrates the clear support of our ore supply partners SMT and SMGM for the TECH Project.
“Since the acquisition of QPM, the TECH project has been advancing well and our partners have recognised this.
“The value of this ore supply agreement should not be underestimated in light of the potential Indonesian bans.
“The high nickel and cobalt grades associated with the New Caledonian ore provides the TECH project with a strong competitive advantage against other projects contemplating the processing of significantly lower grade ore.
Work continues on delivering PFS
“We look forward to delivering the pre-feasibility study and continuing to advance in keeping with our project schedule.”
The PFS underway is based on a scoping study that envisioned a refinery producing around 25,400 tpa nickel sulphate and 3,000 tpa cobalt sulphate over a 25-year life.
The refinery would also produce other valuable co-products including hematite, alumina and magnesium oxide.
The scoping study estimated project capital expenditure including a 20% contingency at US$297 million and annual operating expenses of $108 million or $0.93 per pound of nickel.
To provide context for the estimated opex, during September 2019, the nickel price is trading around US$8.00 per pound and the scoping study estimates a US$2 per pound premium for nickel sulphate.
TECH Project feedstock to come from New Caledonia
Ore to be processed is to be shipped from the nearby island of New Caledonia to Townsville, where that ore will be processed in two stages to produce the desired end products.
Stage one is known as the DNi Process and stage two is known as the CSIRO Process.