Pacific Nickel Mines (ASX:PNM) has started works to execute development of its Kolosori Nickel Project as contemplated in the company’s Definitive Feasibility Study (DFS) recently released to the market.
The DFS indicated the project will deliver attractive economic returns based on the 2 production cases considered, including pre-production capital expenditure of US$18.6 million (both cases) excluding working capital; and mining inventory of 3.8 million wet metric tonnes (base case) to 6.1m wmt (expanded case) of ore.
Pacific Nickel Mines reports it expects the average nickel grade of 1.57% (base case) to 1.51% (expanded case) over the life of mine, and production of up to 1.5M wmt (both cases) Direct Shipping Ore (DSO) per year based on port throughput.
Post-tax NPV is reported to be US$64 million (base case) to US$83 million (expanded case) at a discount rate of 8%, while post-tax IRR of 156% (base case) to 170% (expanded case) with capital payback less than a year in both cases.
The Kolosori Nickel Project is held within Mining Lease ML 02/2022 on Isabel Island, Solomon Islands. Recent developments for the project include starting preliminary access works for the Haul Road have starting; construction of the DSO Loadout Wharf; construction of a 50-man construction camp nearing completion; and Glencore (LSE:GLEN) currently finalising a technical review following receipt of the DFS.
Pacific Nickel CEO Geoff Hiller (recently returned from the Solomon Islands) says: “Given the outcome of the Definitive Feasibility Study which confirms the strong economic viability of the Kolosori Nickel Project, Pacific Nickel Mines is pleased to confirm that the project has moved into an execution stage and critical path construction work has commenced pending finalisation of financing facilities being offered by Glencore International.”
“Pacific Nickel Mines is pleased to confirm that the project has moved into an execution stage and critical path construction work has commenced”
The company believes that the project holds relatively low technical risk and that capital payback will be achieved in under 12 months. To achieve the outcomes indicated in the DFS, pre-production funding of US$21.5 million is required.
The company has employed Blackbird Commodity Partners as its corporate advisor to proceed with the implementation of a project financing offered by Glencore on a non-binding indicative basis. The financing will provide a US$22m senior secured debt facility with a 3-year repayment term. The debt facility remains subject to Glencore completing its final due diligence, completion of full documentation and receipt of various approvals including, most importantly, an export permit.
Pacific Nickel anticipates that the mines and minerals board will meet in early March to consider its application for an export permit.
Hiller adds: “During the course of my visit to site and from discussions with key stakeholders it is evident that Pacific Nickel Mines has the continued support of local landowners, local contractors and relevant Government Authorities and accordingly we remain confident that the company will deliver the Kolosori Nickel Project in the current year.
Pacific Nickel Mines is committed to developing this Project for the for the benefit of all stakeholders. It will be a high quality nickel operation and will operate in accordance with the highest possible environmental standards for the overall benefit of the Solomon Islands and its people.”
Write to Adam Orlando at Mining.com.au
Images: Pacific Nickel Mines Ltd
