Western Areas has approved the Odysseus nickel project at its Cosmos operations in Western Australia after delivering a positive definitive feasibility study (DFS).
The company aims to produce first concentrate at Odysseus by December 2022, making it one of the few nickel sulphide mines coming online as forecast demand for class-one nickel is expected to increase in the electric vehicle (EV) sector.
Western Areas said the Odysseus DFS demonstrated a larger, longer life project with improved economics compared to the pre-feasibility study (PFS).
The DFS confirmed a 10-year operation producing 130,000 tonnes of contained nickel in concentrate.
Odysseus will cost an estimated $299 million to build up to the production stage, according to the DFS.
The project has a pre-tax net present value of $418 million and an internal rate of return at 28 per cent, based on a $US7.50 a pound nickel price.
Western Areas managing director Dan Lougher said the DFS project team was able to refine the PFS work, which resulted in positive outcomes on many fronts, delivering a substantially larger and longer life project.
“The Odysseus ore reserve is now 164,500 tonnes of nickel, with the life of mine nickel concentrate production increasing by 42,700 tonnes to 130,100 tonnes compared to the PFS,” Lougher said.
“Odysseus will utilise a shaft hoisting system, which is justified based on a 10-year operating life and throughput averaging around 900,000 tonnes per annum.
“Western Areas has already secured an option over a high quality, second-hand, shaft hoisting asset from South Africa that is ideally suited to Odysseus and has been costed into the DFS.
“The shaft hoisting operation will utilise a top-down mining approach, rather than the bottom-up method assumed in the PFS, and accordingly has generated substantial savings in ore transportation costs, as well as a reduction in mine development capex.”
Western Areas also believes the project has significant upside opportunities, with optimisation studies to look at the potential of bringing the AM5 and AM6 deposits at Cosmos into production.
The two deposits have a combined indicated mineral resource of 57,600 tonnes of nickel adjacent to Odysseus.
Lougher described Odysseus as an important asset in the Western Australian nickel sector, located on the same prolific nickel belt as BHP Nickel West’s two largest mining operations, Leinster and Mt Keith.
“With current uncommitted offtake, our belief is that Odysseus will be a key strategic asset in the nickel market, ultimately supplying the EV supply chain, into the future,” said Lougher.
“Odysseus is an important organic growth asset for Western Areas and fits within our core operational expertise, being project development, underground mining and conventional flotation.”