Blackstone Minerals Ltd (ASX:BSX, OTCQX:BLSTF) has completed the pre-feasibility study (PFS) for its 90%-owned Ta Khoa Nickel Project (TKNP) in northern Vietnam.
The PFS confirms that an expanded Ta Khoa project will provide a secure, sustainable and economic supply of nickel for Blackstone to produce, through its refinery arm, the Ta Khoa Refinery Project (TKR), a nickel:cobalt:manganese (NCM) precursor for the lithium-ion battery industry.
Integration with downstream operations
The Ta Khoa Project represents “an innovative and globally significant vertically integrated business strategy” to deliver battery-grade NCM Precursor products into the burgeoning lithium-ion battery industry.
BSX believes it has the potential to transform Vietnam’s role in the movement towards the electrification of transportation and will generate significant socioeconomic benefits for the communities in which the company operates.
The primary objective of the TKNP is to provide high levels of reliability and security of nickel supply for Blackstone’s downstream TKR.
To achieve this objective, the PFS identifies Blackstone’s need for a larger beneficiation plant to capture a higher proportion of its flagship Ban Phuc disseminated sulphide (DSS) deposit.
The TKNP beneficiation plant will then be supplemented with feed from the Ban Chang and King Snake underground massive sulfide vein (MSV) deposits.
Increased production
What this means for the mine is production of 64.5 million tonnes at a grade of 0.41% nickel for 264,000 tonnes of nickel and Ban Phuc probable mining reserve of 48.7 million tonnes at a grade of 0.43% nickel for 210,000 tonnes of nickel, with 76% of mill feed over the life-of-mine in the probable reserve category (from the indicated resource category).
This is a 60% increase in contained nickel metal compared to the scoping study base case released in October 2020 and represents an increase in processing life from 8.5 years to 9.2 years and a 39% increase in nickel in concentrate production. Around 50% of the TKR feed will be provided by the TKNP.
Base case economics
The company has based its valuation maths on an average nickel metal price and NCM 811 precursor price of US$20,000/tonne nickel and US$17,670/tonne NCM 811 respectively, though these are both well below spot prices as at the date of publication.
Blackstone believes the true value of the project is inextricably linked to the reliability and security of supply provided to the TKR and the significant value proposition of the TKNP and TKR combined.
Benchmark Minerals Intelligence estimates that the supply available for battery related nickel demand will enter a supply shortage from 2026.
TKNP has pre-production capital in the vicinity of US$854 million, with a maximum cash drawdown of US$771 million expected in 2025. The payback period is expected to be 1.8 years from the first production, and the average annual operating cash flow will be US$533 million, with a post-tax net present value (NPV8) of US$1.99 billion and an internal rate of return of 47%.
Expanded processing throughput
The expanded processing throughput design of 8 million tonnes per annum for the TKNP reflects the resource growth achieved by the company over the past 12 months, reported in December last year.
The TKNP, underpinned by a base load feed from the Ban Phuc DSS deposit, demonstrates a clear pathway for Blackstone to secure a significant proportion of the overall nickel supply intended for the TKR Refinery.
Sustainability woven in
Blackstone’s development strategy is founded on the principles of sustainability and the company says the PFS demonstrates its commitment to sustainable mining.
The PFS includes a fully electrified haulage fleet for open-pit mining operations and an integrated waste land reform strategy based on the co-disposal tailings methodology, which are just some of the early initiatives the company is undertaking to move towards zero carbon.
Controlling interest in resource attractive
Blackstone considers its controlling interest in the TKNP resource base as a major incentive for players in the lithium-ion battery industry to collaborate with the company on its downstream ambitions.
The exploration potential of the Ta Khoa nickel sulphide district is largely untested. Blackstone is committed to ongoing exploration programs and further resource definition, and any future success will have the potential to increase the proportion of concentrate feedstock provided by the TKNP to the TKR.
The company is immediately progressing approval to commence definitive feasibility studies for the TKNP. Importantly, following the successful capital raising of A$60 million in November, BSX is well-capitalised to continue to de-risk the TKNP.