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Cassini Resources may have Australia’s next nickel-copper mine

Proactive Investors Tuesday, 14 November 2017
Cassini Resources (ASX:CZI) has received positive results from the further scoping study (FSS) completed on the Nebo-Babel nickel-copper sulphide deposits within the West Musgrave Project, Western Australia. Significantly, as a result, earn-in partner OZ Minerals (ASX:OZL) has elected to proceed to the next stage, which will see it commence a pre-feasibility study (PFS) and invest a further $19 million. The FSS which examined project scale options and management of technical risks delivered positive economic outcomes for a large, low-cost nickel-copper sulphide mine. The study was based on open-pit mining operations with an initial mine life of eight years, however, several opportunities exist to add mine life, which can increase project economics further. Notably, cash costs from the FSS are forecast to be at the lowest end of the range of Australian nickel and copper producers. Richard Bevan, managing director, commented “The scoping study advances the development of the Nebo-Babel deposits. “The increased scale of the project has opened up a range of possibilities beyond what we had originally contemplated, with potential for further upside to be realised in the upcoming PFS. “We have an initial 8 years of mine life with clear view on increasing this to beyond 15 years. The exploration program will expand our understanding of the mineralisation at One Tree Hill and the Succoth copper deposit, as we pursue our goal of establishing a multi-decade mining operation. “We look forward to our continuing relationship with OZ Minerals and to delivering sustainable value to all our shareholders through the development of the project.” Further scoping study (FSS) results summary The FSS outcomes show a long mine life, low cost, large-scale open pit operation through the development of the Nebo and Babel nickel-copper sulphide deposits. The study shows positive economics supported by low operating costs with nickel C1 costs in the lower third and copper C1 costs in the bottom quartile. Key financial and production estimates include: - Processing capacity: 10+ million tonnes per annum; - Initial life of mine (LOM): 8 years; - Average LOM nickel production: 20-25,000 tonnes per annum; - Average LOM copper production: 25-30,000 tonnes per annum; - Average LOM cobalt production: 700–1,000 tonnes per annum; - C1 cost nickel in concentrate: US$1.30-1.60 per pound; - C1 cost payable copper main US$0.20-40 per pound; - Pre-production capital: A$730-800 million; - Post-tax LOM average net cash flow: $120-150 million; - Post-tax internal rate of return (IRR): 20-25%; and - Post-tax project payback: 3-4 years. OZ Minerals commits to pre-feasibility study OZ Minerals has decided to proceed to the next stage of its farm-in and joint venture agreement with Cassini enabling a 51% earn-in with an investment of $19 million. The FSS has confirmed the economic viability of the Nebo-Babel project and has increased OZ Minerals’ confidence in the potential of the project. Investment will be made during the PFS converting resources from the Inferred to Indicated categories thereby extending the project'smine life. The upcoming PFS will also focus on further improving the metallurgical recoveries. OZ Minerals will management the PFS and Cassini will be paid $1.9 million upon its commencement.
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