Operating Options
There are two logical operating options for Mt Thirsty:
1. Toll treatment
2. Build, own and operate
Toll Treatment
There is more than one practical toll treatment facility in the region. It is understood that each facility is in search of high quality feed resulting from ROM feed being low in Ni and Co grade and difficult metallurgy. Mt Thirsty ore would be an ideal feed given the overall treatment costs for each will reduce due to the favourable metallurgy and overall Ni-Co production will be higher than alternative feed sources.
Each facility will only be interested in toll treating Mt Thirsty ore if a higher return than they would otherwise receive could be achieved. Mt Thirsty material would need to provide each with a benefit which translates into lower risk and greater cash generation.
Toll Treatment Mine and Infrastructure Plan
Ore presentation at Mt Thirsty is relatively straight forward and close to surface. No drill and blast is required and an overall strip ratio (wt:ot) is approximately 2:1. Mining rates will be in the order of 120,000 bcm per month utilising truck and excavator equipment which will only require a 5 day per week, one shift per day mining operation employing approximately 30 personnel. Contract mining has been assumed. The requirement for water and power will be minimal however the Esperance to Kalgoorlie water and gas line pass within 4 km of the site. Employees will commute 15km from Norseman each day. The Esperance to Leonora rail line is also within 4 km of the site which will facilitate the transport of ore from Mt Thirsty. Other facilities that are not serviced by rail can be accommodated using road trains.
Build Own Operate (“BOO”)
The option to BOO presents significant opportunities for upside however these opportunities present some risks. The prevailing risks are most evident in the treatment technology and the required time testing the metallurgical process and design, approving, constructing and operating the operation.
Given the possibility of delay and to a lesser extent technical risk, negotiating a toll treatment arrangement with a Toll Treatment facility at least initially, mitigates any significant risk and allows the project to maximize exposure to any upside.
Pilot plant testing and detailed engineering will be required to finalize both the process flow and equipment selection. Reduction processes to place target Ni, Co and Mn in solution has been effectively applied world-wide for decades thus the risks associated with the metallurgical process are low. The application of SO2 to reduce Ni, Co and Mn at Mt Thirsty requires further detailed metallurgical and mineralogical test work which has been applied to the financial model both in timing and expenditure.
It is anticipated that the current resource will be increased. If this does occur it is worth contemplating upside scenarios for Mt Thirsty. These would include:
1. Increasing plant throughput; and
2. Increasing plant throughput, taking carbonate through to metal, increased recovery and lower treatment cost.
BOO Mine and Infrastructure Plan
Mining method, rates and implementation are assumed to be those employed for toll treating. The economic reserve is assumed to be 9.2Mt @ 0.64% Ni & 0.18% Co (Base Case) whilst upside scenarios increase the economic reserve.
The demand for water and power will be significant with power generation onsite utilizing gas fired turbines fed from the nearby Kalgoorlie to Esperance gas line. Process water will need to be harvested from dams or identified bore fields. Employees will commute 15km from Norseman each day.
Processing will occur on a 24 hour, 365 days per year basis.
Either final product or carbonate concentrate will be transported by rail 220 km to the port of Esperance for export.
