Nova Nickel project in Australia economically viable, says Sirius

14 July 2014 (Last Updated July 14th, 2014 18:30)

A definitive feasibility study conducted by Sirius Resources on its Nova Nickel project in Western Australia has found that the mine is technically feasible and economically viable.

A definitive feasibility study conducted by Sirius Resources on its Nova Nickel project in Western Australia has found that the mine is technically feasible and economically viable.

Located in the Fraser Range, the project is anticipated to produce an average of 26,000 tonnes per annum (tpa) of nickel and 850tpa of cobalt in a nickel concentrate, as well as 11,500tpa of copper in a separate copper concentrate.

The production will be based on the mine's probable ore reserves of 13.1 million tonnes grading at 2.1% nickel, 0.9% copper and 0.07% cobalt. This translates to 273,000t of nickel, 112,000t of copper and 9,000t of cobalt during its initial mine life of ten years.

"We are now in a position to develop this project as 100% owner at a time when the nickel market is forecast to be stronger for longer."

According to the study, the project is expected to cost A$473m ($442m), including a contingency of 5% for unexpected costs and overruns.

Based on the current nickel price of around $20,850 per tonne, Sirius is expecting the mine to generate revenues of A$4.53bn ($4.24bn) and a net cashflow of A$2.74bn ($2.56bn) during its ten-year life.

Sirius Resources managing director Mark Bennett said: "[The feasibility study] is an exceptional result that is largely in-line and in several respects better than the scoping study and has now been considerably de-risked.

"We are now in a position to develop this project as 100% owner at a time when the nickel market is forecast to be stronger for longer. This vindicates our counter-cyclic exploration approach, our ownership consolidation strategy and our long-term view of the nickel market."

Meanwhile, the company has announced that it is in talks with major nickel smelters to supply around 26,000t of nickel concentrate a year.

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