PFS demonstrates ‘healthy’ operational, financial characteristics of Odysseus project

PERTH (miningweekly.com) – The prefeasibility study (PFS) into the Odysseus nickel project, in Western Australia, has estimated that the project could deliver an average of 12 000 t/y of nickel in concentrate over an initial seven-and-a-half-year mine life.

Owner Western Areas on Thursday said the PFS estimated the project will require a capital expenditure of between A$190-million and A$210-million, which would also fund the definitive feasibility study (DFS), to develop the Odysseus project.

The PFS estimated that the project will have a pre-tax net present value of A$292-million and an internal rate of return of 28%, with life-of-mine C1 cash costs estimated at around A$3.21/lb, including cobalt by-products and an all-in sustaining unit cash cost of A$3.69/lb.

Western Areas MD Dan Lougher told shareholders that the PFS results demonstrated the healthy operational and financial characteristics of the Odysseus project.

“The positive results of the PFS, combined with the recent drilling success achieved within 18 months of acquisition, demonstrate Western Areas’ ability to accelerate and deliver value from the Cosmos acquisition.”

“Odysseus represents Western Areas’ next mining operation and the results presented today show that a significant nickel operation can be established for substantially less capital outlay than a standalone greenfield development.”

Lougher said the company believed there was significant opportunity to drive further improvements in returns on the investment, including the potential for significant high-grade resources below the existing deposit.

“Odysseus is a core growth asset for Western Areas with exciting upside potential and progressing this to DFS stage will ensure that Western Areas is ready to leverage an upswing in nickel prices.

“Being a conventional underground nickel sulphate project, it is a great fit with our core skills and experience in hard rock underground mining and conventional nickel flotation at Forrestania,” Lougher added.

Western Areas will now undertake a DFS at Odysseus, and will also work to upgrade a major portion of the inferred ore resource to the indicated category, with further metallurgical work and potential drilling also planned.

Western Areas is expected to spend some A$7-million on the project in the 2017 financial year and a further A$34-million in 2018, with first ore expected in the fourth quarter of 2020 and concentrate in the first quarter of 2021.