ALLIANCE NICKEL LIMITED For personal use only
QUARTERLY ACTIVITIES REPORT
June 2022
26 July 2022
GME Resources Limited ("GME" or "the Company") provides an update on its activities completed during the June 2022 quarter.
Highlights
- Updated PFS Outcomes delivers substantial increases to projected economic returns from development of NiWest Nickel Cobalt Project ("NiWest" or "the Project").
- GME Board seeking to proceed to Definitive Feasibility Study (DFS) on NiWest, Scope of work and costing for study currently being developed.
- Subsequent to the end of the Quarter, Paul Kopejtka appointed as Managing Director effective from September 2022
NiWest PFS Updated Economics
During the quarter GME Resources Limited ("GME" or "the Company") (ASX: GME) completed an update to the cost estimates and price A$/US$ inputs into the Pre-Feasibility Study ("PFS") for the 100%-owned NiWest Nickel-Cobalt Project in Western Australia. This update, which was finalised and announced on 21 July 2022, has confirmed the robustness of a long-life operation directly producing high-purity nickel and cobalt sulphate products to be delivered into lithium-ion battery raw material markets.
Table 1: Key updated PFS outcomes
Financial metric | PFS | Price Case 1 | Price Case 2 | Price Case 3 | ||||||||||
(Aug 2018) | (Jul 2022) | (Jul 2022) | (Jul 2022) | |||||||||||
LME nickel price (US$/lb) | 7.25 | 9.00 | 10.00 | 11.00 | ||||||||||
Nickel sulphate premium (%) | 10% | 10% | 10% | 10% | ||||||||||
LME cobalt price (US$/lb) | 25.00 | 28.50 | 32.00 | 35.00 | ||||||||||
Cobalt sulphate premium (%) | - | - | - | - | ||||||||||
A$/US$ | 0.75 | 0.70 | 0.70 | 0.70 | ||||||||||
Avg cash opex (post Co credits) (US$/lb Ni) | 3.24 | 3.99 | 3.79 | 3.63 | ||||||||||
Pre-production capex (A$M) | 966 | 1,261 | 1,261 | 1,261 | ||||||||||
Life-of-mine sustaining capex (A$M) | 582 | 742 | 742 | 742 | ||||||||||
Total free cashflow (post-tax) (A$M) | 3,342 | 4,494 | 5,797 | 7,067 | ||||||||||
NPV (ungeared, post-tax, 8% real) (A$M) | 791 | 1,082 | 1,587 | 2,079 | ||||||||||
IRR (ungeared, post-tax) | 16.2% | 16.5% | 19.9% | 23.0% |
GME Resources Limited | Quarterly Activities Report - June 2022 | Page 1 of 13 |
For personal use only
- Incorporates higher nickel and cobalt prices and cost escalation impacts since original PFS completed in mid-2018; current LME spot prices of approx. US$9.80/lb nickel and US$27/lb cobalt.
- Mine and process schedule, along with all PFS physical parameters (incl. Ore Reserve), unchanged:
- Low-stripopen pit mining and heap leaching followed by highly efficient Direct Solvent Extraction (DSX) to produce low-cost nickel and cobalt sulphate products. Initial 27-year operating life at a nameplate processing capacity of 2.4Mtpa.
- Total production of 456kt nickel (in nickel sulphate) and 31.4kt cobalt (in cobalt sulphate). Average annual production of 19.2kt nickel and 1.4kt cobalt over the first 15 years.
- Substantial further upside potential from inclusion of Wanbanna, Murrin North, Waite Kauri and Mertondale deposits into NiWest mine schedule to optimise grade profile, increase operating life and/or expand throughput.
(For full details on the NiWest Updated PFS Outcomes refer to ASX announcement 21 July 2022).
Updated PFS outcomes have resulted in GME Board seeking to proceed to Definitive Feasibility Study (DFS) on NiWest; scope and cost of works currently under development. Discussions are on going with a number of interested OEM 's who can access detailed information on the NiWest project via the company's data room.
PFS Update
NiWest hosts one of the highest-grade undeveloped nickel laterite Mineral Resources in Australia estimated to contain 85.2 million tonnes averaging 1.03% nickel and 0.06% cobalt (see Table 2). Over 75% of the resource is contained within the Measured and Indicated JORC categories with potential to expand the currently delineated mineralisation with further drilling. (Refer APPENDIX 1 NiWest Resources and Reserves)
Table 2: NiWest Mineral Resource estimate
Classification | Tonnes | Ni Grade | Co Grade | Ni Metal | Co Metal | |
(Mt) | (%) | (%) | (kt) | (kt) | ||
Measured | 15.2 | 1.08 | 0.064 | 165 | 9.8 | |
Indicated | 50.4 | 1.04 | 0.068 | 527 | 34.5 | |
Inferred | 19.5 | 0.95 | 0.057 | 186 | 11.0 | |
Total | 85.2 | 1.03 | 0.065 | 878 | 55.4 |
Columns may not total exactly due to rounding errors; tonnages are reported as dry tonnage. For full details refer to GME ASX release dated 8 August 2018, NiWest Nickel-Cobalt Project Pre-Feasibility Study. GME confirms that it is not aware of any new information or data that materially affects the Mineral Resource estimate information included in that release. All material assumptions and technical parameters underpinning the Mineral Resource estimate in that release continue to apply and have not materially changed.
GME Resources Limited | Quarterly Activities Report - June 2022 | Page 2 of 13 |
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An extensive PFS was completed on NiWest and released in mid-2018, including declaration of a maiden Ore Reserve ("PFS 2018"). This study demonstrated the technical and economic robustness of a long-life operation directly producing high-purity nickel and cobalt sulphate products to be delivered into high-growthlithium-ion battery raw material markets. For full details of the PFS 2018, refer to GME ASX release dated 2 August 2018, NiWest Nickel- Cobalt Project Pre-FeasibilityStudy.
Figure 1: NiWest Project location showing individual deposit areas and proximity to infrastructure
As previously announced (refer GME ASX release dated 8 April 2022, NiWest Nickel-CobaltProject - PFS Update Commenced), GME, in conjunction with its key consultants, has undertaken an update of the cost and metal/A$/US$ price assumptions utilised in the PFS 2018. All physical parameters from the PFS 2018 remain unchanged as part of this exercise, including the mine and process schedule and the Ore Reserve. For a summary of key modifying factors within the Updated PFS process, refer to Appendix A of the ASX release 21 July 2022 (Updated PFS Outcomes for NiWest Nickel/Cobalt Project).
The key physical parameters (remain unchanged) from the PFS 2018 are presented in Table 3 and Figure 2.
GME Resources Limited | Quarterly Activities Report - June 2022 | Page 3 of 13 |
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Table 3: Key PFS 2018 physical and operational outcomes
Physical Parameters | Unit | First 15 years | LOM total | ||||||||
Construction and Ramp-up | |||||||||||
Construction period (incl. 6 months mining) | months | na | 24 | ||||||||
Heap pad and plant ramp-up phase | months | na | 20 | ||||||||
Mining | |||||||||||
Mining activities | years | 15 | 20 | ||||||||
Ore mined | Mt | 54.0 | 64.9 | ||||||||
Waste mined | Mt | 115.2 | 132.9 | ||||||||
Strip ratio | waste:ore | 2.1 | 2.0 | ||||||||
Processing | |||||||||||
Ore processed | Mt | 36.0 | 64.9 | ||||||||
Processing life | years | 15.0 | 27.1 | ||||||||
Nickel head grade | % Ni | 1.05 | 0.91 | ||||||||
Cobalt head grade | % Co | 0.071 | 0.058 | ||||||||
Steady-state nickel recovery | % | 79 | 79 | ||||||||
Steady-state cobalt recovery | % | 85 | 85 | ||||||||
Contained nickel produced | kt | 288 | 456 | ||||||||
Nickel sulphate produced (99.95% purity) | kt | 1,290 | 2,044 | ||||||||
Contained cobalt produced | kt | 21.0 | 31.4 | ||||||||
Cobalt sulphate produced (>99.9% purity) | kt | 99.9 | 149.9 | ||||||||
GME Resources Limited | Quarterly Activities Report - June 2022 | Page 4 of 13 |
Figure 2: NiWest nickel and cobalt production (contained in sulphates)
only | 25.0 | Nickel (in nickel sulphate) | ||||
Cobalt (in cobalt sulphate) | ||||||
outputcobaltand(kt) | 20.0 | |||||
High-grade extensional | ||||||
upside potential | ||||||
15.0 | ||||||
use | 10.0 | |||||
Nickel | 5.0 | 1-Y Y0 Y1 Y2 Y3 | Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 | Y13 Y14 Y15 Y16 Y17 Y18 Y19 | Y20 Y21 Y22 Y23 Y24 Y35 Y26 Y27 Y28 | |
0.0 | ||||||
personal | Capital and Operating Costs | |||||
Forecast operating and capital costs have been re-estimated through a process of further | ||||||
prospective supplier interaction and general inflationary scaling. These revised cost estimates | ||||||
are presented in Tables 4 and 5 and have an estimated band of certainty of +/-35%, with the | ||||||
pre-production capital estimate also incorporating an increased contingency allowance of | ||||||
approximately 25%. | ||||||
Table 4: Operating cost estimates | ||||||
Item | A$/t ore processed | A$/t Ni produced | A$/lb Ni produced | |||
Updated PFS July 2022 | ||||||
Mining | 27.4 | 3,902 | 1.77 | |||
Processing | 81.5 | 11,623 | 5.27 | |||
For | General and admin | 7.2 | 1,023 | 0.46 | ||
Product distribution | 6.8 | 966 | 0.44 | |||
Total (ex royalties) | 122.9 | 17,514 | 7.94 | |||
PFS 2018 | ||||||
Mining | 21.2 | 3,026 | 1.37 | |||
Processing | 63.1 | 9,000 | 4.08 | |||
General and admin | 5.8 | 825 | 0.37 | |||
Product distribution | 5.7 | 809 | 0.37 | |||
Total (ex royalties) | 95.8 | 13,660 | 6.19 |
GME Resources Limited | Quarterly Activities Report - June 2022 | Page 5 of 13 |
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GME Resources Limited published this content on 25 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 July 2022 22:38:00 UTC.
