Independent Review Sets High Expectations for Sconi

A market study by CRU International has pegged Australian Mines’ (ASX:AUZ) Sconi cobalt-nickel-scandium project as having potential to make a mark in the nickel and cobalt sulfate market.

In a gushing release, Australian Mines said that Sconi, when operational, “has been forecast to be one of the most competitive cobalt-producing nickel operations in the world” by the CRU study which was commissioned by the company.

The market study will no doubt add to the project’s appeal, after it was declared a “proscribed project” by the Queensland government in January, meaning it has a smoother road to completion.

Today (February 12), the company pointed to market demand and a forecast nickel supply gap as the driver behind Sconi’s potential to be among the “1st quartile compared to other existing and proposed analogous operations globally” when it comes online.

Australian Mines said Sconi’s location in Asia meant it was the ideal project to help fill a 1.3 million tonne nickel market gap.

“According to the market study, Australian Mines’ decision to process Sconi ore into a battery-grade nickel sulfate product via the construction of a 2 million tonne per annum processing plant at Greenvale will be further rewarded in the longer term as the premium anticipated to be paid by offtakers for direct delivery of a sulfate end-product will increase beyond 2025 as higher cost processing routes begin to be factored in to meet growing demand.”

According to Australian Mines, the market study compared various nickel sulfate producers with projects either proposed or in the works, including GEM (SHA:002340), Huayou, (SHA:603799), Sumitomo (TSE:8053), Clean TeQ (ASX:CLQ,TSX:CLQ) and Umicore (EBR:UMI).

Sconi, located in northern Queensland near the city of Townsville, is planned to go into production later this year, with first production estimated for 2021 and the project to be ramped up by 2022.

Two million tonnes of ore will be processed at the Greenvale site each year, producing 8,500 tonnes of cobalt, 53,500 tonnes of nickel sulfate and 77 tonnes of scandium oxide annually.

Sconi is currently expected to have an 18-year mine life: the company released a bankable feasibility study for the AU$1.4-billion project in November 2018 with an estimated annual revenue of AU$512 million.

On the ASX, Australian Mines was trading up 2.44 percent by market close on Tuesday, at AU$0.042. Year-to-date, the company is up over 10 percent.

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