Confirms Significant New Nickel Sulphide Project In Brazil
Centaurus Metals (ASX: CTM) has completed a positive independent Base Case Scoping Study for the development of its 100%-owned Jaguar Nickel Sulphide Project in the Carajás Mineral Province of northern Brazil, establishing a strong foundation for a significant new global nickel sulphide project.
The Scoping Study outcomes demonstrate the potential for Jaguar to become a sustainable, long-term and low- cost producer of Class-1 nickel for global markets, generating strong financial returns while also delivering significant social and economic benefits for the local communities in which the Project is located.
The Study was conducted by a group of leading independent consultants including Entech Pty Ltd, Re-Metallica and DRA Global, overseen by in-house Centaurus personnel.
The Base Case Scoping Study considers open pit and underground mining over an initial 10-year mine life, delivering nickel sulphide feed to a 2.7Mtpa conventional nickel flotation plant to produce approximately 20,000 tonnes of recovered nickel metal per year at a low life-of-mine (LOM) C1 operating cost of ~US$2.41/lb.
The Base Case Study will be followed by a Value-Added Scoping Study in three to four weeks time that considers the production of nickel metal through the inclusion of a Pressure Oxidation circuit to further value-add the nickel concentrate produced in the flotation plant.
- Production of nickel concentrate via a conventional 2.7Mtpa nickel flotation circuit
- Base Case nickel price assumption of US$7.50/lb (US$16,530/tonne)
- Strong Financial Returns
- Post‐tax NPV8 of ~US$453 million (~A$604 million)
- Post-tax IRR of ~54%
- Post-tax capital payback of ~1.9 years from first nickel concentrate production
- Net Revenue totalling ~US$2.42 billion (~A$3.23 billion)
- EBITDA totalling ~US$1.23 billion (~A$1.64 billion)Average Annual Free Operating Cash Flow (Pre-tax) of ~US$109 million (~A$145 million)
- Production Target of 32.8Mt @ 0.84% Ni for 275,600t of contained nickel
- Target comprises 61% Indicated Mineral Resources and 39% Inferred Mineral Resources
- Initial 10-year Mill Feed of 24.0Mt @ 1.08% Ni for 260,300t of contained nickel
- LOM recovered nickel of 203,300t (~20ktpa annual average nickel in concentrate grading 15.8% Ni)
- First production is targeted for the end of 2024, based on current environmental approvals timeline
Managing Director, Mr Darren Gordon, said the project is Ideally positioned to meet forecast growth in demand for Class 1 nickel from the EV battery market
He said the completion of a positive Scoping Study just over 18 months after acquiring the Jaguar Nickel Sulphide Project reflects the project’s outstanding fundamentals and its ability to underpin the development of an outstanding new sustainable long-life, low-cost nickel sulphide operation.
“Our goal is to transform Centaurus into a new-generation nickel sulphide mining company in Brazil, capable of delivering more than 20,000 tonne per annum of Class-1 nickel sulphides to global markets for many years to come. The Scoping Study clearly shows that Jaguar has all the attributes required to achieve this goal, and to do so in a sustainable and responsible manner that ensures we meet the highest possible ESG standards.
“The Base Case Scoping Study reveals a project with compelling economics combined with the ability to deliver significant social benefits to the local community in which the Company plans to operate, over a long period of time.
“The development of the Project will provide many new job opportunities in and around the local municipalities. With a construction workforce of over 1,000 people, 190 full-time operational personnel and up to 500 mining contractor employees, Jaguar will not only provide direct employment opportunities but will also stimulate the local economy through the creation of a number of indirect employment and business opportunities.
“A key attribute of the Jaguar Project’s economics lies in the low C1 operating costs of approximately US$2.41/lb and the associated free cash-flows that are generated over the initial 10-year mine life. As a result, we have a high degree of confidence that Jaguar will be financially viable in any future nickel price environment. The low C1 cash costs reflect both the significant open pit volumes and the low operating cost environment in Brazil, and results in high operating margins that will be resilient to fluctuations in the nickel price and exchange rates.
“At a conservative life-of-mine nickel price of US$7.50/lb, the base case project delivers a post-tax NPV of ~A$604 million, an IRR of ~54%. This gives us the confidence to push ahead with further feasibility activities, with a Pre- Feasibility Study scheduled to commence immediately and pave the way for a Definitive Feasibility Study next year that will allow us to make a Final Investment Decision on a long-life operation with low capital intensity and low operating costs, capable of generating strong shareholder returns.
“The development timeline for the Jaguar Project sees production planned for the second half of 2024. Most major investment bank research suggests that the demand for Class-1 nickel at this time will be strongly outstripping supply – which should be favourable for nickel producers, particularly those like Centaurus that can sustainably produce nickel from sulphide sources at very low operating costs.
“At a nickel price of US$9/lb, which is forecast by a number of the investment banks for the middle of this decade when operations at Jaguar are targeted to commence, the Project’s post tax NPV would rise to ~A$1.01 billion, with an IRR of ~80%.
“It’s also important to remember that this Scoping Study provides a snapshot of the Project as it currently stands. We have a high degree of confidence in the ability to grow our Resource base well beyond current levels. As we press ahead with the Pre-Feasibility Study, we are maintaining an aggressive approach to exploration, with four diamond drill rigs operating around the clock and a new RC rig to arrive on site in the coming weeks to grow our Resource inventory and target new discoveries that could deliver a further significant uplift in the Project’s already strong value proposition.”