Project Development Studies
Feasibility Study
The completion of the Feasibility Study Report as a requirement for the 2008 renewal of tenement EL1165, has been the most important focus of the RMC Board and Management team over the past hear and particularly the current reporting period.
Final inputs to the Feasibility Study Report were received during the report period, with the report compilation, editing and peer review being begun in December 2009, (The work was completed at the beginning of February 2010).
An analysis of the fundamental economics provides support for the conclusion that the project is economic using the forecast price of US$19,400 per tonne nickel, US$58,200 per tonne cobalt, and a USD/AUD exchange rate of 0.8. The financial model yields an internal rate of return of 16% with a net present value of US$270 million (10% discount rate).
The financial evaluation of the Wowo Gap Project has been performed by using a discounted cash flow model based on the following key parameters.
Feasibility Study Parameters
• HPAL to process limonite ore utilising saprolite ore to neutralise acid
• HPAL plant designed to process 1.25 Mtpa of limonite and 0.25 Mtpa of saprolite ore over a 20 year operation life
• Anticipated annual production of 13,000 tpa of nickel metal and 1,300 tpa of Co metal equivalents
• Nickel and cobalt product to be produced as a mixed sulphide product
• The use of saprolite ore to neutralise acid, based on an anticipated 30% Ni recovery from the saprolitic material
• Excellent rheology of Wowo limonite allowed plant design for 40-45% solids by volume which reduces overall acid consumption
• Calculated pay back of capital within 5 years following ramp-up to full production
Results
An analysis of the fundamental economics provides support for the conclusion that the project is economically robust, with the financial modelling yielding an internal rate of return of 16% with a net present value of US$270 million (10% discount rate). However the sensitivity analysis of the key parameters of nickel price and exchange rate shows the NPV is highly sensitive to these variables.
The forecast operating cost of US$3.88/lb places calculated project operating costs at the mid point of worldwide Nickel process operating costs.
Whilst dependent upon future Nickel price, project is robust with an NPV of US$270M @ 10% discount rate and an IRR of 16% based on a Nickel price of US$8.80/lb.
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