This year’s mining rock star Sirius Resources estimates it will cost $471 million to deliver its Nova-Bollinger project with a production capacity of 28,000 tonnes of nickel and 11,000 tonnes of copper a year.
Releasing its Scoping Study today for its Nova-Bollinger nickel deposit, located 700 kilometres east of Perth, the junior expects to be positioned in the lowest 20 per cent of nickel producers globally with an estimated cash operating costs of $AU1.75/lb nickel concentrate.
“The release of the Scoping Study is an important milestone for our company,” Sirius managing director Mark Bennett said.
He stated that the results confirm the “exceptional quality” of the deposit and improves Sirius’ chances of becoming a significant global nickel producer.
Holding a 70 per cent stake in the deposit, Sirius forecasts nickel revenue for the initial 10 year mine life will be $AU4.6 billion.
The forecasts have been worked out on an assumed nickel price of $US10/lb, copper at $US3.3/lb and an Aussie to US exchange rate of .90 cents.
But the company warns the project is “strongly leveraged to movements in the nickel price”, with project cash flow changing about $AU440 million over life of mine for each US dollar per pound movement in the nickel price.
Planning to build an underground mine, the company expects first material to be mined in quarter two 2016, ramping up to full production at a rate of 1.5 million tonnes per annum by quarter three 2017.
Sirius estimates constructing a processing facility with the capacity to handle 1.5mtpa will take about two years and cost about $AU119 million to complete, it aims to commence construction in the July quarter next year.
Nickel and copper concentrates will be transported by road to Esperance.
The total infrastructure bill is expected to come in at $233 million and will include accommodation to house up to 400 people, an aerodrome and onsite diesel generated power.
The mine plan remains reliant on financing, joint venture decisions and regulatory approvals.
Since making the initial Nova discovery a little over a year ago, Sirius shares sky rocketed from 5.7c a share at the time of the discovery to a high of almost $5 in March lifting the group's market capitalisation to $1.04 billion, before levelling off to currently trade in the $2.70 range.