GME Hopes to Ride EV Wave with NiWest Nickel-Cobalt Project

Australian miner GME Resources (ASX:GME) has released a prefeasibility study that casts its NiWest nickel-cobalt project in a flattering light.

According to the study, NiWest has “technical and financial robustness for a long-life operation directly producing high-purity nickel and cobalt sulfate products to be delivered into the forecast rapid growth of lithium-ion battery raw material markets.”

NiWest is in good company, located in Western Australia’s Goldfields-Esperance region, it’s next door to mining major Glencore’s (LSE:GLEN) operating Murrin Murrin nickel-cobalt mine, which produced 46,000 tonnes of nickel and 3,200 tonnes of cobalt in 2016.

NiWest’s maiden ore reserve estimate sits at 64.9 million tonnes grading 0.91 percent nickel and 0.06 percent cobalt for 592,000 tonnes of nickel and 38,000 tonnes of cobalt.

The study says that NiWest has an initial operating life of 27 years and projects average annual production of 19,200 tonnes of nickel and 1,400 tonnes of cobalt for the first 15 years, with total production pegged at 456,000 nickel sulfate and 31,400 tonnes of cobalt sulfate.

Construction would take 24 months following an investment decision, with commissioning and ramp-up to take a further 20 months.

The company has committed itself to more work on deciding what’s to come next, forecasting pre-production capital expenditure of AU$966 million.

“GME intends to undertake a wider and more advanced period of engagement with potential strategic partner/offtake parties prior to commencing a definitive feasibility study on the NiWest project,” the company said.

“This process is targeted at a comprehensive and robust assessment of the broad range of potential ownership, development and funding structures currently available to GME and the NiWest project.”

Managing Director of GME, Jamie Sullivan said the prefeasibility study had gone a long way in establishing a road map to production.

“Through its recently completed PFS, GME has made outstanding progress in delineating an attractive development pathway for the NiWest nickel-cobalt Project,” said Sullivan.

“The chosen processing route for NiWest adopts commercially proven, lower-risk, lower-capital intensity heap leaching, coupled with highly efficient direct solvent extraction. The elevated technical and economic risks associated with high pressure acid leaching and atmospheric leaching have been consciously avoided. The net result is forecast low-cost production of high-purity nickel and cobalt sulfates.”

The economic life of mine costs are estimated at US$8 per pound of nickel and US$25 per pound of cobalt with an ungeared post-tax net-present value (8 percent) of AU$791 million, internal rate of return of 16.2 percent and a payback period (pre-tax) of 4.4 years.

Additionally, the prefeasibility study estimates an average cash unit operating cost (post royalties and cobalt credits) of US$3.24 per pound (lb) contained nickel (US$3.00/lb for the first 15 years).

“The projected class 1 nickel supply/demand deficit and the rapidly growing demand for nickel and cobalt sulfate products from the electric vehicle lithium-ion battery market creates an attractive environment for GME to pursue the development of, and value realization from, the NiWest Project,” said Sullivan.

On the Australian Securities Exchange, GME was trading down 23.53 percent at AU$0.13 at market close on August 1.

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