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Cassini Resources Limited (ASX:CZI), a Perth-based base and precious metals developer & explorer, is advancing on the flagship West Musgrave Project (WMP). The Company (30%), in close association with JV partner OZ Minerals Limited (70%), is working towards the development of Nebo-Babel deposits, first amongst many deposits at Australia's largest undeveloped Nickel-Copper project, WMP.
The co-owners recently completed a Pre-Feasibility Study (PFS) into the Nebo-Babel deposits, with results confirming excellent economics on a low-operating cost, long-life Ni-Cu mine at Nebo-Babel.
PFS Results for Cassini Resources’ Cu-Ni Project Confirm Excellent Economics Must Read
A snapshot of the PFS results is as follows-
- Long mine life of approximately 26 years
- Impressive project value generation potential - A$800m NPV, IRR 20%
- C1 cost of ~US$(0.90)/lb Cu and~US$1.30/lb Ni
- Advanced technology usage including 80% renewable power
- Battery pre-cursor products with average production of 22 ktpa Ni and 28 ktpa Cu
Capital Expenditure
The capital estimate was prepared by Australian copper-gold major OZ Minerals Limited (ASX: OZL) using inputs on various cost expenses from engineering consultants, especially Australian Mining Consultants (AMC) for mining costs and GR Engineering Services (GRES) for process plant and elements of infrastructure costs.
All major equipment costs were quoted specific to the requirements of the West Musgrave Project, with estimates of smaller equipment and labour costs based on the GRES database of the recently executed mining projects. The caution in the estimation would restrict overruns in project estimates at the time of the project development.
Contingency & Project Risks, All Covered
The total upfront project capital expenditure stands at A$995 million, which includes a contingency of ~12% to safeguard the project finances and minimise the chances of overruns. The contingency calculations have been made after extensive risk assessment, which includes a project contingency of A$50 million for risks that may arise during the construction phase and A$65 million for inherent risks (related to estimating immaturity).
The life of mine sustaining capital has been estimated at A$370 million, for the expenditures related to tailings storage facility lifts, process plant and mining fleet. According to the current assumption, if power is purchased over the fence as per a PPA (power purchase agreement), any capital cost concerning power generation facility would not be included.
Low Operating Cost- Support Strong Project Economics
The project operating cost includes the mining, processing and overhead expenses on the mining site. The life of mine average operating cost stands at approximately A$34.3 per ton of ore.
The pre-feasibility study considers and recommends a modern mine development with the application of advanced technologies for mining, processing and power generation. The modern approach will reap benefits for the project co-owners, and the shareholders and community in return.
Operating cost, in terms of commodity volumes, is generally expressed in terms of cash cost. A lower cash cost favours the mining operation and suggests good economics of the project. Cash cost could be reported as C1, C2 or C3, and C1 is the most widely used cash cost in the mining industry, which could be defined as-
A C1 cash cost is an operating expense incurred at each stage on per unit production basis, from mining to recovered metal delivered to the market inclusive of by-products credits.
The LoM (life of mine) average C1 cash cost for the Nebo-Babel project stood at approximately US$1.30/lb Ni and US$(0.90)/lb Cu (net of by-product credits). The cash cost curve compares the operating expense of the project to every commodity operation across the globe and the Nebo-Babel project lies in the lowest quartile (<25%) of the cash cost curve for both Nickel and Copper commodities.
Major factors for the low-cash cost estimates are as follows-
- Low mining costs
- Significant by-product credits due to multiple payable commodities
- Advanced processing solutions, with high metallurgical recoveries and concentrate grades
- Lower power usage during the processing stage
- Separate and high-quality nickel & copper concentrate
The project capital expenditure and lower operating expenses estimates for the West Musgrave project at a Net Present Value (NPV) of A$800 million (30% attributable to CZI), with an Internal Rate of Return (IRR) of almost 20%, ensures excellent value generation for the shareholders on development.
Global demand for high-quality battery and electrification metals is set to grow in the upcoming years. Amid, a situation of fewer advanced, quality, scalable nickel sulphide projects, globally, Cassini Resources’ West Musgrave Nickel-Copper project is well placed with robust project economics to deliver to the surging demand.
On 5 March 2020, the CZI stock closed the day’s trade at A$0.085, up 11.842% from its previous close, with a market cap of A$32.51 million.
Interesting Read: Cassini Resources Meets Western Australia at Crossroads on World’s Largest Ni-Cu Undeveloped Project
