Nico Resources (ASX:NC1) reports it is working towards finalising and releasing the Prefeasibility Study (PFS) for the Wingellina Nickel-Cobalt Project, which forms part of the larger and 100% owned Central Musgrave Project (CMP).
Overall PFS progress to date suggests the key physical outcomes are ‘optimal’ for the production of approximately 40,000tpa of contained nickel and 3,500tpa of contained cobalt over the next 40 years based on ore reserves only.
Nico is working closely with specialist consultants such as Worley to finalise the PFS.
The majority of capital and operating cost projections have been received and in line with the company’s expectations.
The CMP consists of a package of tenements hosting a JORC Mineral Resource Estimate in excess of 200Mt, containing 1.95Mt of nickel, and 150,000t of cobalt along the Probable Ore Reserve of 164.8Mt containing 1.56Mt of nickel and 123,000t of cobalt.
The project tenure is approximately 1,469km-square located within Western Australia and South Australia, adjoining the Surveyor Generals Corner (the junction between Western Australia, the Northern Territory and South Australia).
Wingellina is one of the ‘largest’ nickel resources and top 10 ‘largest’ nickel reserves in the world.
Renewable power solutions are currently being assessed for the onsite power supply, which can be a ‘competitive’ power option that involves a Build-Own-Operate model from independent power producers.
The company believes it is best to incorporate this model into the PFS as it could result in ‘significant’ benefits that will lower emissions. This has delayed the finalisation of the PFS.
A review of the previously completed metallurgical test work programs illustrate significant work previously completed is suitable for the basis of the PFS flowsheet design with Mixed Hydroxide Precipitant being the ‘ideal’ product for the PFS design.
Process plant and infrastructure flowsheet design and layouts have been largely completed.
The mine design has been reviewed, and the current mining schedule remains ‘optimised’ for the current resource.
Following an update of the resource model earlier this year, an updated production schedule will be delivered into the Definitive Feasibility Study (DFS).
The PFS is expected to confirm the potential for the Wingellina Project to become a ‘globally significant’ producer of nickel with cobalt and manganese
The PFS is expected to confirm the potential for the Wingellina Project to become a ‘globally significant’ producer of nickel with cobalt and manganese to feed the growing lithium-ion battery market.
Further optimisation of the project will be undertaken to include technology advancements within the flowsheet and products.
Drilling to confirm the delineation of high-grade nickel and cobalt pits to provide a ‘higher grade’ feed in earlier years, along with resource definition drilling for calcretes has also commenced.
A reverse circulation (RC) drill program is currently underway that involves the drilling of 167 RC holes for approximately 7,000m on a planned 177m by 100m spaced infill drillholes.
The objective of the program is to confirm the delineation of 17 high grade pits which were derived from the Wingellina resource model in 2017. Two programs have already been undertaken with the more recent program being interrupted by COVID.
The current program is to confirm the delineation of the remaining 8 ‘high-grade’ Ni-Co pits within a broader Ni-Co deposit to complement the previously defined ‘high-grade’ pits delineated from the 2017 to 2020 programs.
All of the drillholes are located within 5km of the proposed processing plant site. Downhole depths will vary from 12m to 102m and average about 41m.
The definition of these ‘high-grade’ pits will provide inputs of the production scheduling into the BFS, which will result in the processing of a much ‘higher-grade’ material within the first 10 years, which will enhance the cashflows and further improve the economics.
It is anticipated the drilling program will be completed in November.
Nico Managing Director Rod Corps said from the commencement of the study in April, the company set an ‘aggressive’ timetable for the completion of the PFS.
“The company alongside its consultants have worked tirelessly to complete the relevant work programs and we have made significant progress.
Most of the operating and capital cost estimates have been received and are in line with expectations.
The process flowsheet and infrastructure, subject to reviewing some additional technological advances, has also been completed.
As a result of the exponential advancements in the competitive production of renewable power and the significant benefits that it is likely to provide to the project, we believe it is important now to include these benefits into the PFS with the completed PFS now expected to be completed during December.
Importantly, with the expanded detailed understanding of all the key project elements, improved confidence, and supporting data this will allow the company to actively engage with potential strategic partners, offtakers and project financiers, a process that has now commenced.
The high level of detail obtained during the current PFS study will also allow the company to potentially improve timelines for the planned bankable feasibility study (BFS).
Pleasingly, our initial interactions with various levels of government have also provided encouragement and recognition that our mine development plans are in line with the many government policy initiatives designed to facilitate investment in both new and greener mining development.
The adoption of a low emissions process flowsheet that efficiently delivers high-quality metal products that can be used directly by manufacturers and end-users, in conjunction with targeted high renewables penetration in the project energy mix, reflects the high-level of project development credentials to be delivered by the company.”
The company reports that quotes for major equipment supplies have been received. The feed preparation capex estimation for the processing plant is largely completed.
An update to the reagent and consumable costs is in progress, with consideration as to where the reagents will be sourced from and the associated freight costs.
As is typical, the finalisation of all capital and operating cost estimates are expected to be the last major workstream completed ahead of the finalisation and release of the PFS.
Shortly after listing, Nico completed an internal review and market analysis of the emerging chemical metal space that is feeding the lithium-ion battery market.
The genesis of this top down-market review approach was to understand what products will best serve the evolving demands of the lithium-ion battery market.
Nico’s research has determined that Mixed Hydroxide Precipitant was the product best suited for this evolving battery market which was already the preferred product of the project’s previous flowsheet design.
The layout of the major equipment within the processing plant flowsheet has been undertaken by Nico in conjunction with Worley with the intent of highlighting areas for potential optimisation.
Due to the advent of the lithium-ion battery industry as a potential offtake market, an opportunity to design a flowsheet to capture additional metals such as Manganese, a product previously considered a penalty in mixed hydroxide precipitant have come to fruition.
Nico along with Worley are reviewing the requirement for the Manganese removal circuit and the associated reagent costs.
This trade-off study is one of several opportunities that has presented itself to the company.
A review of all the offsite-infrastructural and logistics has been completed for the PFS.
Nico notes that the geographical location of the project lends itself to the potential of multiple options for logistics routes. Interestingly, the Wingellina Project sits almost equidistance from the ports of Adelaide, Darwin and Esperance.
For the purpose of the PFS, Nico has settled on the port of Adelaide, however an optimisation exercise remains for the DFS. The logistics route to market includes road transport along the existing Great Central Road to a central hub proposed for the Impadna rail siting, followed by rail transport to Adelaide.
The capital cost estimates includes an upgrade of the existing 134km road from the site to the Great Central Road via the Giles-Mulga Park Road. Additionally, the Australian Government and the Western Australian Government have jointly committed to seal the Great Central Road with a target completion date of 2030.
This will make the Great Central Road safer, and more cost-effective for logistics operations for the Wingellina Project.
The groundwater drilling and subsequent groundwater modelling completed to date demonstrate a ‘sustainable’, ‘high-quality’ water supply from local paleochannels of the officer basin yielding 12GL/a of water, sufficient to supply the Project for the first 25 years of operation.
This was a result of testing the extremities of the water modelling and Nico, along with its hydrological consultants, believe there is ‘ample’ water supply for the lifetime of the mine.
As a result of the significant advances in the competitiveness of the renewable energy markets, a detailed evaluation of power supply arrangements is progressing with third-party engineering and consulting groups.
A completion of trade-off studies is expected shortly, upon which the finalisation of the overall electricity demand and supply parameters can be ascertained. Key elements currently under consideration include the level of penetration for solar PV, wind and large-scale battery storage.
The intention remains to source as much of the total power requirements as possible from renewable sources to support the company’s goal of minimising emissions.
Recently completed positive power supply studies in the area by other operators have indicated that there is ‘ample’ natural resource supply to constitute a ‘sizeable’ off-grid hybrid power supply.
Nico views the embedded renewable power characteristics of its own operation with the already included thermal co-generation steam capture project characteristic as an advantageous building block to base renewable hybrid power supply matrix for its proposed operation.
In September 2016 after the submission of a final Public Environmental Review in August 2015, EPA approval was obtained to proceed with the implementation of the Wingellina Nickel Project proposal.
The approval period was for an initial 5-year term, and Nico is currently in the process of applying for an additional 5-year extension.
Nico has had initial contact with the Commonwealth Government department responsible for the application of ‘Major Project Status’.
These designations provide for the facilitation of ‘numerous’ approval processes through the many overlapping branches of government, while also ensuring recognition of the potential contribution that the project would make to social and economic development.
It is understood that the completed PFS will be a key document used to finalise the company’s application for Major Project Status to the MPFA.
In September 2021, the Commonwealth Government also created a $2 million Critical Minerals Facility (managed by Export Finance Australia) to facilitate new project development.
Nico’s funding strategy is to develop a multi-source funding package consisting of government agencies such as Export Credit Agency (ECA).
The company has obtained agreements with the traditional owners of the Wingellina Project. Mining and access agreements as well as financial compensation benchmarks including royalties have been agreed with the relevant land councils and traditional landowners.
The Wingellina ILUA sets out the rights and obligations of all parties in relation to the conduct of the Project, being the mining and processing of nickel and cobalt ores from within a designated area, within all the WA Tenement locations.
Nico reports that it has continued to build on the ‘strong’ relationships created by Metals X (ASX:MLX) with the traditional owners of the Wingellina Project.
Strong interaction and sharing of knowledge whilst respecting the cultural diversity of the traditional landowners is key to the process.
Nico recognises the importance of understanding what the traditional owners require not only from a monetary perspective but the requirement to facilitate health, education, employment and general wellbeing, whilst operating in harmony with the local community.
The company has engaged an experienced candidate for a role solely focused on stakeholder engagement and continues to foster a cooperative and collaborative approach towards maintaining its existing relationship with its traditional owner partners.
Nico Resources is an ASX-listed independent Australian nickel company focusing on Australian nickel projects.
Images: Nico Resources Ltd