Amur Angles For Low-cost Nickel Crown

- May 2nd, 2018

An in-house estimate shows Amur Minerals’ Kun-Manie nickel-copper project would place it among the world’s 10 lowest-cost nickel producers.

Amur Minerals (LSE:AMC) has conducted an in-house cost estimate that shows its Kun-Manie nickel-copper sulfide project in Russia’s Far East would place it among the world’s 10 lowest-cost nickel producers.

The estimate is based on a previous report, which showed that the Kun-Manie project in Northeastern Amur Oblast had mining potential of 73 million ore tonnes for a life of mine length of 12 years, with 6 million tonnes mined per year in a combination of open-cut and underground mining processes.

According to the estimate, the C1 cost per pound of nickel depends on which production option the company opts for, but is between US$5,750 and US$6,100 per tonne.

Chief executive officer of Amur, Robin Young, stated, “comparison of these newly defined costs indicates that Kun-Manie could be a low cost competitor within the nickel industry ranking in the lowest 10 producers by cost and, potentially, even as low as fourth…we are well below the CRU projected average production cost of US$10,000 per tonne.”

The choice in production has to be made between a contract toll smelting option, based on available smelter offtake agreements, or the construction of an owner-operated low grade matte facility at the Ulak rail station nearby. Cost of transporting ore to the Ulak rail station – from where the metal would be transported elsewhere – is factored in to both options.

The estimate indicates that the owner-operated option is currently the cheapest. At US$5,750 per tonne.

Regardless of which option Amur picks, Young said that the in-house estimate showed the company was well positioned to take advantage of the electric car boom.

“Looking at how we rank among the greenfield and brownfield projects, we note that there are about 10 projects that contain more than our 1.2 million tonne nickel resource. Of these, only two have higher grades of ore than our average of 0.75 percent nickel,” Young said.

“Interestingly, the remaining six have average grades below what we use as a cutoff grade which is 0.4 percent nickel.  As such, we feel well positioned in the new emerging nickel demanding electronic vehicle market,” he added.

The company currently has 20-year production rights through to 2035 over a 36 km2 area at Kun-Manie, where it’s entitled to recover 100 percent of the nickel, copper, cobalt, platinum, gold and silver it mines.

While the estimates show the mine could operate for a little over 12 years at 6 million tonnes of ore per year, according to the company, production rights can be extended upon the discovery of additional minerals. The company said in its report that the site has substantial potential to increase the mine life to a minimum 15 years.

Shares with the Amur Minerals closed up 3.22 percent at GBX 5.30 on Wednesday.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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