Sirius Nova-Bollinger project comes up trumps in study

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ID 10038360
ID 10038360

This year’s mining luminary Sirius Resources released its scoping study for its Nova-Bollinger nickel deposit today.

Image courtesy of [jannoon028] \ FreeDigitalPhotos
Image courtesy of [jannoon028] \ FreeDigitalPhotos
The project located 700 kilometres east of Perth is estimated to cost $471 million with a production capacity of 28,000 tonnes of nickel and 11,000 tonnes of copper a year.

According to Sirius managing director Mark Bennett the release of the Scoping Study is an important milestone for the company. He said the results confirm the “exceptional quality” of the deposit and improves Sirius’ chances of becoming a significant global nickel producer.

The company, however warns in a report that the project is “strongly leveraged to movements in the nickel price”, with project cash flow changing about $AU440 million over life of mine for each US dollar per pound movement in the nickel price.

Holding a 70 per cent stake in the deposit, Sirius forecasts nickel revenue for the initial  10 year mine life will be $AU4.6 billion.

Sirius estimates constructing a processing facility with the capacity to handle 1.5mtpa will take about two years and cost about $AU119 million to complete.

Its Definitive Feasibility Study is on track to be completed by mid-2014. It aims to commence underground development and on-site construction in the July quarter and expects first material to be mined in quarter two 2016, ramping up to full production at a rate of 1.5 million tonnes per annum by quarter three 2017.

Since making the initial Nova discovery a little over a year ago, Sirius shares have shot up from $0.05 at the time of the discovery to a high of $5 in March, lifting the group’s market capitalisation to $1.04 billion before leveling off to currently trade in the $2.70 range.

According to Proactive Investors Australia, Sirius has the potential to become a significant Australian and world scale nickel producer with operating costs in the lowest 20% of nickel production globally at $AU1.75/lb nickel concentrate.

Forecasts have been worked out on an assumed nickel price of $US10/lb, copper at $US3.3/lb and an Aussie to US exchange rate of .90 cents.