Black Canyon (ASX:BCA) expects to attract the interest of potential partners after completing a Scoping Study of the KR1 and KR2 mineral resources within the Balfour Manganese Field, located in the east Pilbara region of Western Australia.
The $5.54 million market capitalisation company controls the largest contained manganese deposits in Western Australia.
Speaking to Mining.com.au following the release of the 2 July 2024 study results, Managing Director Brendan Cummins says there’s growing interest in the manganese market in shoring up longer term suppliers of concentrate, of which India and China will be well suited for its products.
“There’s still a lot of upside within the region. Within 20 to 30 kilometres, we’ve also got another 100, 200 million tonnes waiting for us to go and exploit,” Cummins tells this news service.
“The next level of study really looks at a base case being where we are now at KR1, KR2, but looking at how additional feed might feed into that as well, low strip ratio, potentially high-grade feed as well. So, a lot more to pick, but this has been a stunning start.
“That’s one aspect we’re doing. The second aspect is progressing our feasibility studies. We’ll be looking at continuing the environmental studies that we’ve already commenced at the start of this year, and then doing some more drilling, infield drilling, some meteorological testwork.”
Yet there’s a lot of potential still to be realised in the region, Cummins says, noting the total global resource discovered by Black Canyon within the BMF over just three years totals 314 million tonnes. Cummins says the project has global significance.
According to the International Manganese Institute, major producers of manganese ore include South Africa, Australia, Brazil, Gabon, and Ghana. The ore is smelted to make manganese alloy, with China the biggest producer by far, although its stockpiles have been declining on the back of South African exports falling at the end of 2023.
With global demand for manganese poised to rise Black Canyon expects plenty of inbound interest. Global manganese ore supply in 2023 was 60 million tonnes – up 2% from 2022 and is equivalent to 21.24Mt of contained manganese at an average grade of 35.4% Mn. This makes it the fourth most common metal by tonnage, behind iron, aluminium, and copper.
The Scoping Study, which shows the project could produce 12Mt of manganese concentrate over the LOM, focuses on operating costs and increasing the scale of the operation. The MD says this means utilising larger equipment and a bigger truck fleet matched with increased processing throughput in order to bolster efficiencies.
“In terms of processing cost, it is really quite simple. Beneficiation, looking at a fairly simple crush, wash, and then putting it through screens, producing a lump and a fines product. But what we’re looking at in terms of mining is also surface mining, because the material is quite soft,” Cummins adds.
“We believe surface mining might also add an additional economic benefit to the project and further testwork as well to possibly deliver a high-grade concentrate product.”
The study uses the 44% manganese benchmark (CIF Tianjin) price based on a long-term average price of US$5.60 per dry metric tonne unit (dmtu), with the current price more than US$8.00/dmtu. With a concentrate sales price of US$4.60/dmtu for a 33% manganese product, C1 cash costs of US$3.02/dmtu and all-in sustaining cost (AISC) of US$3.38/dmtu/CIF are expected.
“The current study is looking at 33% concentrate, producing 760,000 tonnes per annum of manganese concentrate. Most of that will be at 33%. But we’re looking at, can we get a bit more out of this deposit. Can we do a little bit more processing on site and deliver maybe a mid-30s grade manganese product,” Cummins adds.
The Scoping Study shows Black Canyon’s KR1 and KR2 mineral resources within the Balfour Manganese Field will generate life of mine revenue of $2.781 billion, EBITDA of $654 million, and average annual operating cash flows of $46.1 million.
The $84 million capex project has a pre-tax NPV of $340 million (8% discount rate) and pre-tax IRR of 70% with a payback period of less than two years.
Write to Adam Orlando at Mining.com.au
Images: Black Canyon
