Sconi to generate $5 billion in free cashflow over 30-year mine life
Advanced battery materials developer Australian Mines (ASX: AUZ) has announced an updated mine plan, Ore Reserve Estimate and financials for the Sconi Cobalt-Nickel-Scandium Project in North Queensland, Australia. The new 30-year mine life will result in an increase in the expected total revenue generated by the project to $13.2 billion.
Advanced battery materials developer Australian Mines (ASX: AUZ) has announced an updated mine plan, Ore Reserve Estimate and financials for the Sconi Cobalt-Nickel-Scandium Project in North Queensland, Australia.
· Expanded Mineral Resource at Sconi to support longer mine life of 30+ years
· Highlights from updated Ore Reserve
· 69% increase in Total Ore Reserve tonnes to 57.30 million tonnes
· 17% increase in Proved Ore Reserve tonnes to 8.08 million tonnes
· 82% increase in Probable Ore Reserve tonnes to 49.22 million tonnes
· Highlights from revised financials
· Additional mine life increases Total Revenue by 44% to $13.3 billion
· Total free cashflow increases 93% to $5.0 billion
· NPV8 (pre-tax) increases by 12% to $1.47 billion
· IRR (pre-tax) revised down slightly to 20%
· NPV8 (post-tax) increases by 17% to $0.81 billion
· IRR (post-tax) maintained at 15%
Following the positive drill results announced earlier this year, which substantially expanded the Mineral Resource for the Sconi Project, the Company has been working on refinements to the Sconi mine plan originally released as part of the Sconi Bankable Feasibility Study in November 2018 (“BFS”).
Input has been provided by global engineering and construction firm Ausenco, specialist mine planning consultants Orelogy, and Simulus Laboratories, who partnered with Australian Mines in the construction and operation of the Company’s demonstration-size processing plant in Perth. As a result of this work, which included an update to the Ore Reserve and mine design, the Company is pleased to report that the planned Life of Mine of the Project has increased from 18 years to at least 30 years.
There has likewise been a significant increase in both the projected pre-tax and post-tax NPV8% of the Sconi Project to $1.47 billion and $0.81 billion respectively based on the same economic assumptions contained in the Sconi BFS.
The extended mine life will also result in an increase in the expected total revenue generated by the project, which has risen to $13.27 billion over the 30+ year life. In February 201912, the Company announced a 63% increase in the tonnage of the Greenvale Mineral Resource and a 94% increase in the Lucknow Mineral Resource, with Total Mineral Resources for Sconi now estimated at 75.71 million tonnes at 0.60% nickel and 0.08% cobalt.
The Project is now estimated to produce 1,405,000 tonnes of nickel sulphate (up 46%, 209,000 tonnes of cobalt sulphate (up 37%) and 1,441 tonnes of scandium over the project life.