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Australian Mines envisages $5 billion in free cashflow from Sconi over 30-year mine life

69% increase in total ore reserve to 57.30 million tonnes and life of mine increased to at least 30 years.
Additional mine life increases total revenue by 44% to $13.3 billion

Australian Mines Ltd (ASX:AUZ) has revealed an updated mine plan, ore reserve estimate and financials for the Sconi Cobalt-Nickel-Scandium Project in North Queensland.

As a result of this work, the planned life of mine of the project has increased from 18 years to at least 30 years.

Sconi is estimated to produce a total free cashflow after tax of $5.0 billion over the initial 30- year project life, for a simple payback of capital of 4.4 years on a pre-tax basis and 5.8 years on a post-tax basis.

The extended mine life has resulted in significant increase in the expected total revenue generated by the project, which has risen to $13.27 billion over the 30+ year life.

Total projected revenue and EBITDA of the Sconi project

The projected pre-tax and post-tax net present value (NPV) of the project has increased to $1.47 billion and $0.81 billion respectively based on the same economic assumptions contained in the Bankable Feasibility Study (BFS).

The project is now estimated to produce 1,405,000 tonnes of nickel sulphate (up 46%), 209,000 tonnes of cobalt sulphate (up 37%) and 1,441 tonnes of scandium over the project life.

Assuming that today’s typical medium size electric vehicle (EV) contains between 6 and 12 kilograms of cobalt and between 15 and 30 kilograms of nickel, the total nickel and cobalt production from Sconi over its life will be sufficient to produce the equivalent of at least 3 million to 6 million EV battery packs.

AUZ managing director Benjamin Bell said: “As we stated in February, the revised mineral resource estimate was likely to have a positive impact on the overall economics of the proposed mining and processing operation at Sconi, which the BFS had already shown to be commercially viable.

“The additional tonnage forms the basis of a revised mine plan and ongoing refinements to the Company’s BFS that we continue to work on, with the aim of maximising value to our shareholders.

“I am delighted to report that the results so far have shown significantly longer mine life and corresponding improvements to the Sconi Project’s financial outcomes.

Sconi Project ore reserve summary

Bell added: “The Sconi Project will result in a significant upgrade of existing public and common-use infrastructure located within the local region including roads, airport and telecommunications.

“The use of local businesses is a key feature and requirement of the construction contract and we have committed to develop an Australian Industry Participation Plan and an Indigenous Employment Plan for the Sconi Project.

“In the construction phase, local businesses with experience in fabrication, engineering, labour, plant and equipment hire, metalwork, welding, and drilling will all be encouraged to tender for work.

“This is in line on our promise of employing local, living local, buying local.”

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