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Amur Minerals pre-feasibility study outlines potential for US$3bn in cash flow from Kun-Manie

Amur has one of the largest undeveloped nickel sulphide projects in the world

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Demand for nickel use in electric vehicle batteries is set to rise

Amur Minerals Corporation (LON:AMC) has revealed details of a pre-feasibility study for its Kun-Manie nickel project in Russia’s Far East.

The study outlines two production scenarios capable of processing six million tonnes of ore per annum. 

WATCH: Amur Minerals pre-feasibility study outlines potential for US$3bn in cash flow from Kun-Manie

The first option is the toll smelt option which provides the swiftest path to revenue generation. In this scenario, it’s envisaged that concentrate will be sold to a purchaser.

The second option is for Amur Minerals to construct and operate an electric furnace/flash smelter that will convert concentrate to low grade matte. This option allows for the capture of additional revenues from the by-product metals of copper, cobalt, platinum and palladium.

The study is based around a JORC resource of 155.1mln tonnes of ore comprising a nickel equivalent grade of 1.02%, equating to a total of 1.58 million equivalent tonnes of nickel 

Production will derive from four open pits and one underground mining operation.

 Under the toll smelt option, the project shows a post-tax NMP of US$614.5mln, assuming a long-term nickel price of US$8.00 per pound, and generates a post-tax internal rate of return of 29.3%. It will generate free cash flow, post-tax of just over US$2bn.

Under the low-grade matte option, the NPV rings in at US$987.4mln and generates an internal rate of return of 34.7%. Mining and processing under this scenario will generate free cash just shy of US$3bn.

The toll smelt option will cost US$570mln to build, while the low-grade matte option will cost US$695mln. Payback under both scenarios will be three years.

"The PFS provides a robust review of Kun-Manie's value, scale and viability and it is our intention to explore further the strategic options that will enhance the Company's continued development of the project,” said chief executive Robin Young.

“We believe that it puts the company in a strong position and provides attractive economics to invite discussions with varied parties to strengthen our team and deliver production at Kun-Manie. Additionally, there is significant potential for further upside to this PFS, following the company's successful drill programme last year, which yielded a number of positive results including expansion of the mineral resource estimate and mine life.”

 

Quick facts: Amur Minerals Corp.

Price: 2.0025 GBX

LSE:AMC
Market: LSE
Market Cap: £16.74 m
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