Study confirms West Musgrave potential

Oz Minerals and Cassini Resources believe their West Musgrave nickel-copper project in Western Australia can be a long-term, low-cost operation, following completion of a pre-feasibility study.

The West Musgrave project is a joint venture between Adelaide-based OZ Minerals, which holds a 70 per cent interest in the project, and Cassini Resources (30 per cent).

It is Australia’s largest undeveloped nickel-copper project, located 500 kilometres west of Uluru, near the intersection of the borders between Western Australia, South Australia and the Northern Territory.

Pre-feasibility study outcomes for the Nebo-Babel deposits have revealed a 26-year life of mine, up from eight years on scoping study results, with a net present value of $800 million and an internal rate of return of 20 per cent (post-tax).

This is based on a maiden ore reserve of 220 million tonnes at 0.36 per cent copper and 0.33 per cent nickel.

The project will produce around 28,000 tonnes copper concentrate per annum and around 22,000tpa nickel, with a bottom quartile cash cost operation of $US0.90 per pound copper and around $US.139/lb nickel.

Pre-production capital costs - excluding costs of the study which are more than $50 million - are estimated to be $995 million, up from $730-800 million on the scoping study results.

OZ Minerals chief executive Andrew Cole said the study confirmed a potentially low carbon and low cost operation.

“Building a viable asset in a remote part of Australia is challenging, but through our collaborative approach we have developed innovative off-grid renewable power and processing solutions, increased stakeholder awareness and involvement in the project and we have built confidence in the mineral resource itself,” Mr Cole said.

“Furthermore, we have been able to reduce and eliminate a number of potential project risks.”

He said the study had also provided the means to reduce the project’s carbon footprint and overcome challenges of affordable power to West Musgrave.

“We believe, supported by the views of potential renewable energy suppliers, that 70-80 per cent of the power needs for West Musgrave can be supplied by renewable sources, supplemented by battery storage and diesel or trucked gas fired generation,” Mr Cole continued.

“A gas pipeline remains a secondary option to be further investigated during the next phase.”

The Nebo-Babel deposits were discovered by Western Mining in 2000 and acquired by BHP in 2005.

In 2014, Cassini Resources acquired the West Musgrave project and completed extensive drilling and scoping study in 2015.

A year later, OZ Minerals and Cassini entered into a joint venture, and a further scoping study was completed in late 2017.

OZ Minerals has since increased its ownership of the project to 70 per cent by reaching expenditure thresholds.