ALLIANCE NICKEL LIMITED For personal use only
ABN 62 009 260 315
Suite 8, Level 3
47 Havelock Street
West Perth WA 6005
PO Box 39
West Perth WA 6872
P: +61 8 9336 3388
www.gmeresources.com.au
ASX ANNOUNCEMENT/MEDIA RELEASE
21 July 2022
Updated PFS Outcomes for NiWest Nickel-Cobalt Project
GME Resources Limited ("GME" or "the Company") (ASX: GME) is pleased to advise of the completion of 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 ("NiWest" or "the Project"). This update 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
- 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$27/lb cobalt.
- Mine and process schedule, along with all PFS physical parameters (incl. Ore Reserve), unchanged:
- Low-stripopen pit mining and heap leaching followed by highly efficient Direct Solvent Extraction (DSX) to produce low-cost nickel and cobalt sulphate products. Initial 27-year operating life at a nameplate processing capacity of 2.4Mtpa.
- Total production of 456kt nickel (in nickel sulphate) and 31.4kt cobalt (in cobalt sulphate). Average annual production of 19.2kt nickel and 1.4kt cobalt over the first 15 years.
- Update delivers substantial increases to projected economic returns from development of NiWest.
Table 1: Key updated PFS outcomes
Financial metric | PFS | Price Case 1 | Price Case 2 | Price Case 3 | |||||||
(Aug 2018) | (Jul 2022) | (Jul 2022) | (Jul 2022) | ||||||||
LME nickel price (US$/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% | |||||||
- 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.
- 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.
Page 1 of 6
Updated NiWest PFS outcomes
For personal use only
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.
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.
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- growth lithium-ion battery raw material markets. For full details of the PFS 2018, refer to GME ASX release dated 2 August 2018, NiWest Nickel-CobaltProject Pre-FeasibilityStudy.
Figure 1: NiWest Project location showing individual deposit areas and proximity to infrastructure
Page 2 of 6
For personal use only
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 this release (NiWest Nickel/Cobalt Project, Updated Pre-FeasibilityStudy Executive Summary: Capital and Operating Costs Review, July 2022).
The key physical parameters from the PFS 2018 are presented in Table 3 and Figure 2.
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 |
Figure 2: NiWest nickel and cobalt production (contained in sulphates)
25.0 | ||||||||||||||||||||||||||||||
Nickel (in nickel sulphate) | ||||||||||||||||||||||||||||||
Cobalt (in cobalt sulphate) | ||||||||||||||||||||||||||||||
(kt) | 20.0 | |||||||||||||||||||||||||||||
High-grade extensional | ||||||||||||||||||||||||||||||
output | ||||||||||||||||||||||||||||||
upside potential | ||||||||||||||||||||||||||||||
15.0 | ||||||||||||||||||||||||||||||
cobalt | ||||||||||||||||||||||||||||||
Nickel and | 10.0 | |||||||||||||||||||||||||||||
5.0 | ||||||||||||||||||||||||||||||
0.0 | ||||||||||||||||||||||||||||||
Y-1 | 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 |
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%.
Page 3 of 6
Table 4: Operating cost estimates
Item | A$/t ore processed | A$/t Ni produced | A$/lb Ni produced | |||||
personal use only
Updated PFS | |||||
Mining | 27.4 | 3,902 | 1.77 | ||
Processing | 81.5 | 11,623 | 5.27 | ||
General and admin | 7.2 | 1,023 | 0.46 | ||
Product distribution | 6.8 | 966 | 0.44 | ||
Total (ex royalties) | 122.9 | 17,514 | 7.94 | ||
PFS 2018 | |||||
Mining | 21.2 | 3,026 | 1.37 | ||
Processing | 63.1 | 9,000 | 4.08 | ||
General and admin | 5.8 | 825 | 0.37 | ||
Product distribution | 5.7 | 809 | 0.37 | ||
Total (ex royalties) | 95.8 | 13,660 | 6.19 |
Table 5: Capital cost estimates
Category | Breakdown | Updated PFS | PFS 2018 | ||||||||
(A$M) | (A$M) | ||||||||||
Direct Costs | Crushing and Heap Leaching | 138.0 | |||||||||
Processing | 193.7 | ||||||||||
Utilities and Reagents (including acid plant) | 312.9 | ||||||||||
General Infrastructure | 42.3 | ||||||||||
Total Direct Costs | 852.6 | 686.8 | |||||||||
Indirect Costs | EPCM | 72.7 | |||||||||
Owners | 9.7 | ||||||||||
Other Indirects | 76.8 | ||||||||||
Total Indirect Costs | 185.3 | 159.3 | |||||||||
Contingency | % of Total Directs (25% 2022, 17.5% 2018) | 222.6 | 120.2 | ||||||||
Total Pre-Production Capital | 1,260.5 | 966.3 | |||||||||
Life-of-Mine Sustaining Capital | 742.0 | 582.0 |
Updated NiWest PFS financial projections incorporating these revised cost estimates under several nickel, cobalt and A$/US$ price scenarios are presented in Table 6. The basis for these revised price assumptions is outlined in Appendix A, as with the sensitivity of financial outcomes to key input estimates.
Table 6: Key updated financial projections
For
Financial Outcomes | Unit | PFS | ||||||
(Aug 2018) | ||||||||
Price Inputs | ||||||||
LME nickel price | US$/lb | 7.25 | ||||||
Realised contained nickel price (in sulphate) | US$/lb | 8.00 | ||||||
LME cobalt price | US$/lb | 25.00 | ||||||
Realised contained cobalt price (in sulphate) | US$/lb | 25.00 | ||||||
A$/US$ exchange rate | US$ | 0.75 | ||||||
Valuation, Returns and Key Ratios | ||||||||
NPV8% (pre-tax, ungeared) | A$M | 1,390 | ||||||
NPV8% (post-tax, ungeared) | A$M | 791 | ||||||
IRR (pre-tax, ungeared, real basis) | % | 21.2 | ||||||
IRR (post-tax, ungeared, real basis) | % | 16.2 | ||||||
Payback period (pre-tax) | Years | 4.4 | ||||||
Pre-production capital intensity | US$/lb pa | 19.5 | ||||||
NPV8% (pre-tax) /Pre-production capex | ratio | 1.4 | ||||||
Project life / Payback (pre-tax) | ratio | 6.1 | ||||||
Cashflow Summary | ||||||||
Nickel sulphate revenue | A$M | 10,730 | ||||||
Cobalt sulphate revenue | A$M | 2,309 | ||||||
Total revenue | A$M | 13,039 | ||||||
Site operating costs | A$M | -5,859 | ||||||
Product distribution costs | A$M | -369 | ||||||
Royalties - State and private | A$M | -429 | ||||||
Project operating surplus | A$M | 6,381 | ||||||
Pre-production capital expenditure | A$M | -966 | ||||||
LOM sustaining capital expenditure | A$M | -582 |
Case 1 | Case 2 | Case 3 |
(Jul 2022) | (Jul 2022) | (Jul 2022) |
9.00 | 10.00 | 11.00 |
9.90 | 11.00 | 12.10 |
28.50 | 32.00 | 35.00 |
28.50 | 32.00 | 35.00 |
0.70 | 0.70 | 0.70 |
1,883 | 2,604 | 3,306 |
1,082 | 1,587 | 2,079 |
21.6% | 25.9% | 29.7% |
16.5% | 19.9% | 23.0% |
4.4 | 3.7 | 3.3 |
23.8 | 23.8 | 23.8 |
1.5 | 2.1 | 2.6 |
6.2 | 7.3 | 8.3 |
14,227 | 15,808 | 17,389 |
2,820 | 3,166 | 3,463 |
17,047 | 18,974 | 20,852 |
-7,550 | -7,550 | -7,550 |
-441 | -441 | -441 |
-559 | -627 | -693 |
8,497 | 10,356 | 12,168 |
-1,261 | -1,261 | -1,261 |
-742 | -742 | -742 |
Page 4 of 6
For personal use only
Project free cashflow (pre-tax) | A$M | 4,833 | 6,494 | 8,353 | 10,165 |
Tax paid | A$M | -1,490 | -2,000 | -2,556 | -3,099 |
Project net cashflow (post-tax) | A$M | 3,342 | 4,494 | 5,797 | 7,067 |
Unit Cash Operating Costs | |||||
Net operating costs (post Co credits) | A$/lb Ni | 4.32 | 5.70 | 5.42 | 5.19 |
Net operating costs (post Co credits) | US$/lb Ni | 3.24 | 3.99 | 3.79 | 3.63 |
All-in-sustaining cost (AISC) | US$/lb Ni | 3.68 | 4.50 | 4.31 | 4.15 |
Further upside opportunities
The PFS is based on mining and processing of solely the economic component of the Measured and Indicated Resources within the Eucalyptus, Hepi and Mt Kilkenny deposits. As such, the Inferred Resources within these three deposits, combined with the entire Wanbanna, Murrin North, Waite Kauri and Mertondale deposits, presents significant potential opportunity to deliver further grade profile optimisation and increase the operating life and/or the production rate of the NiWest Project. Further infill drilling is required to increase the resource classification at each of the respective deposits.
Next Steps
The Updated PFS outcomes have resulted in the GME Board seeking to proceed to a DFS on NiWest. The scope and cost of works for a DFS is currently under development.
GME is also engaged in discussions with potential strategic partner/offtake parties as part of assessing the range of potential ownership, development and funding structures available to the NiWest Project.
For further information please contact:
Jamie Sullivan | Michael Vaughan |
Managing Director | Fivemark Partners |
Perth, Western Australia | Perth, Western Australia |
+61 8 9336 3388 | +61 422 602 720 |
jamiesullivan@gmeresources.com.au | michael.vaughan@fivemark.com.au |
About GME Resources Limited:
GME Resources Limited is an ASX-listed exploration and development company with nickel, cobalt and gold interests in Western Australia. GME's principal asset is its 100% owned NiWest Nickel Cobalt Project situated adjacent to Glencore's Murrin Murrin Operations. The Company has completed a Pre-Feasibility Study which has confirmed the technical and economic viability of a heap leach and direct solvent extraction operation at one of the largest undeveloped nickel/cobalt deposits in Australia. Further information is available on GME's website: www.gmeresources.com.au.
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GME Resources Limited published this content on 20 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 July 2022 23:03:05 UTC.
