14/07/2014 - 12:13

Sirius says Nova will cost $473m to start up

14/07/2014 - 12:13

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Balcatta-based Sirius Resources says it's Nova nickel project near Norsemen will cost around $473 million to develop, according to a definitive feasibility study released today.

Sirius says Nova will cost $473m to start up
Sirius managing director Mark Bennett.

Balcatta-based Sirius Resources says its Nova nickel project near Norsemen will cost about $473 million to develop, according to a definitive feasibility study released today. 

Sirius said the study highlighted the project as low risk and highly profitable, with the potential to become one of the world’s lowest-cost nickel mines.

The company said the feasibility study was in line with the results of a scoping study that was carried out in September last year. 

Sirius said the mine’s ore reserve, comprising 273,000 tonnes of nickel, 112,000 tonnes of copper and 9,000 tonnes of colbat, would be mined over the initial 10-year mine life following a two-year development period.

“Cash operating costs are estimated at $1.66/lb nickel in concentrate, which is better than originally estimated in the scoping study and will position Sirius in the lowest quartile of global nickel producers,” Sirius said in a statement.

“By applying the estimated nickel and copper prices of $US10/lb and $US3.30/lb respectively, and with the current US exchange rate, Nova is forecast to generate a net cash flow of $2.74 billion from a forecast nickel revenue of $4.53 billion over the life of the mine.” 

The $473 million in capital expenditure also includes a contingency of $22 million for unexpected costs and overruns, which is down from the originally estimated $51 million in the scoping study. 

“Metrics such as the high resource-reserve conversion rate, the very low forecast cash costs and the large projected net cash flow all support the low risk and the world-class nature of the project,” Sirius managing director Mark Bennett said.

“We are now in a position to develop this project as 100 per cent owner at a time where the nickel market is forecast to be stronger for longer.”

The company took full ownership of the nickel deposit in February, when it bought out Ponton Minerals' major shareholder Mark Creasy's 30 per cent stake for a stock and cash package worth nearly $200 million. 

Sirius shares last traded at $3.60 per share at 12pm. 

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