15/01/2009 - 14:52

WA cobalt project to cost $606m

15/01/2009 - 14:52


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A study into the Mount Thirsty cobalt-nickel-manganese project in Western Australia has found the $606 million operation could catapult the joint owners into the world's top five cobalt producers.

WA cobalt project to cost $606m

A study into the Mount Thirsty cobalt-nickel-manganese project in Western Australia has found the $606 million operation could catapult the joint owners into the world's top five cobalt producers.

An independent study into Barra Resources and Fission Energy's project could produce 3700 tonnes of cobalt, 10,300t of nickel and 27,000t of manganese per annum in its first three years.

This would immediately rank it the fourth largest cobalt producer in the world.

The joint owners have already set a bankable feasibility study completion target of December 2009 for Mt Thirsty, located 20 kilometres northwest of Norseman.

The study findings, by Perth-based metallurgical and engineering consultancy, Simulus, are part of ongoing pre-feasibility studies into Mt Thirsty's potential.

The study defined a likely capital cost for the mine of $US400 million ($A606 million) on current day values, with potential net cashflow over the 17 year life of the mine of $A1.65 billion.

"The annual cobalt production profile in those maiden years is potentially as much as such current leading global suppliers," Barra Resources managing director Dean Goodwin said.

"This is a major fillip for Mt Thirsty relatively early in determining its full potential.

"Of critical importance in the findings is that Mt Thirsty can be developed as a 2 million tonne per annum open-cut mine with a simple extraction process, with no new technology required to maximise its potential.

"This underpins our metallurgical testwork to date which has returned metal recoveries of 99% cobalt, 78% nickel and 98% manganese at low acid consumption of between 150-330 kilograms per tonne."

"Further modelling remains to be completed but it is expected that proceeds from Mt Thirsty's nickel production can cover most if not all operating costs - leaving the cobalt and manganese production credits delivering an undiluted revenue stream," Mr Goodwin said.

"The results also strongly qualify our long-held view that Mt Thirsty has every fundamental to be both world-class in its mineralisation and metallurgy and world-leading in its supply dynamics, project establishment costs and operational performance.

"On the metallurgical findings alone, it is clear that Mt Thirsty's mining and production potential will allow it to achieve from start-up, at least 3-4% of global cobalt production."

Mt Thirsty has a current JORC Inferred and Indicated resource of 29 million tonnes at 0.56 per cent nickel, 0.14 per cent cobalt and 0.88 per cent manganese, at a 0.06 per cent cobalt cutoff over an apparent strike of 1.3 kilometres and 800 metres width.

Mr Goodwin said high cobalt throughput could easily be achieved early in Mt Thirsty's production schedule as large volumes of high grade totally oxidised ore which did not require drilling or blasting, were within 8-19 metres of surface.

"This in effect, front-loads production at estimated initial cash operating costs of A$100 per tonne, increases Net Present Value (NPV) and shortens the capital payback period to between 4-5 years," Mr Goodwin said.

The Simulus study revealed an NPV for Mt Thirsty of $A450 million with an Internal Rate of Return of 27 per cent, based on a nickel price of $US10,000 per tonne.

The project's nickel operating costs would be in the lower quartile - around $US2.49 per pound after cobalt credits, with Mt Thirsty close to rail, road, water, gas and sea export infrastructure.

The project's cobalt and nickel metal together with manganese carbonate concentrate could be shipped to third party refineries with the processing plant design allowing ready expansion. The joint venture aims to complete its Bankable Feasibility Study by the end of this year.

World cobalt supply in calendar 2007 totalled 53,700 tonnes. Lead suppliers included China (just under 13,500t); OMG, Finland (9,100t); Xstrata's Norwegian operations (3,939t); Russia's Norlisk plants and ICCI's Canadian operations - both just above 3,500t; and BHP Billiton's Australian operations - producing just under 2,000t.


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