Centaurus Metals (ASX: CTM | OTCQX: CTTZF) has made the strategic decision to develop the company’s Jaguar Nickel Project in two phases in response to the changing nickel market conditions. The first phase will focus on the production of a nickel sulphide concentrate, maintaining the contained nickel output. A second downstream nickel sulphate refinery phase will follow when and if market conditions allow.
This approach will significantly reduce the first phase development capital costs compared to an integrated project. It will result in a more robust project through the price cycle given the Jaguar Project’s anticipated low operating costs, stemming in large part from the clean, low-cost power (~US$0.03/kWh) that is available to the Project from the 230kV national grid in Brazil.
The Jaguar Feasibility Study will be reshaped to focus on a Concentrate Project based on the study work already completed for the fully integrated nickel sulphate project. Ausenco is now working to close out their required work activities by the end of this month, allowing Centaurus to deliver the Jaguar Concentrate Feasibility Study by the end of June.
Recent discussions with potential customers and strategic partners have indicated strong interest for Jaguar’s low-carbon, non-Indonesian supply of nickel sulphide concentrate product. The company retains full optionality to reconsider the development of a downstream refinery in the future if supported by market conditions, potential strategic partnership/s with EV battery industry participants and/or a genuine ‘green’ pricing premium for low carbon emission Class-1 nickel emerges.
The phasing decision aligns with Centaurus’ key objective to maximise the value of the Jaguar Project whilst minimising potential equity dilution to existing shareholders and overall project execution risk. Cost saving initiatives will be implemented to preserve Centaurus’ strong cash balance of ~US$32M. Other targeted growth initiatives will be progressed, including copper exploration and potential monetisation of Centaurus’ iron ore assets.
The Company has been monitoring the dramatic change in nickel market conditions over the past few months, principally as a result of increasing supply from Indonesia with a corresponding change in underlying supply and demand dynamics. The LME nickel price has fallen by over 36% over the past year, from around US$25,000/t to recent lows below US$16,000/t, forcing a number of mine closures globally in high-cost environments including in Australia and eliminating the premium that was previously available for nickel sulphate production.
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