Australian Mines Ltd advises that a review of the sterilisation drilling completed across the proposed processing infrastructure sites at Sconi, as part of the company’s BFS, has indicated that high grade cobalt and nickel mineralisation extends across the sites proposed for the processing plant and haul roads.

The sterilisation drilling, undertaken by Metallica Minerals in the lead-up to the project PFS, identified a preferred site for the processing plant at Sconi. This location appears primarily designed to optimise scandium production from the orebody and did not comprehensively sterilise the cobalt and nickel prospectivity of the proposed mining and processing area.

Since acquiring a 100%-interest in Sconi from Metallica Minerals in 2017, and having signed a binding off-take agreement with SK Innovation, Australian Mines has been focused on optimising the Sconi BFS for cobalt and nickel production to maximise economic returns.

This finding by Australian Mines’ studies team that the previous sterilisation drilling intersected similar grades to those included in the project’s current Mineral Resource indicates that the overall footprint of cobalt and nickel mineralisation at the 100%-owned Sconi project may be significantly larger than previously indicated by both the PFS for Sconi and the project’s existing Mineral Resource Statement.

As a result, Australian Mines, in collaboration with lead engineering firm Ausenco, are presently re-evaluating the location and layout of the full-scale cobalt-nickel-scandium processing plant, and associated non-processing infrastructure to ensure the final site design enables maximum operational efficiency (and, thus, the lowest possible operating costs for the project) in tandem with optimising the Sconi project’s life-of-mine.

The current optimisation process for the Sconi BFS, which is appropriate in light of the additional cobalt and nickel mineralisation within sites earmarked for the processing plant and supporting infrastructure, will necessarily result in a slight adjustment to the proposed BFS timetable. The company now expects to receive the draft version of the report by the end of July 2018, with the final Board-approved version subsequently released to the market in September 2018.

This adjusted timing of the BFS is not expected to have any effect on the construction date for the project given that both SK and the financial institutions engaged in negotiations with Australian Mines are imbedded in the current BFS process.

Australian Mines’ Managing Director, Benjamin Bell, commented: “Given this operation has the potential to run for several decades once commissioned it is imperative that we invest time at this critical planning stage to ensure the site is set-up to maximise and sustain future production.

“The positive news from the review of the sterilisation drilling program, is that the grades intersected were sufficient for us to reassess the plant location and will inevitably be the catalyst for us to reassess the overall footprint of the cobalt and nickel mineralisation.

“The results from sterilisation drilling at Sconi, along with the anticipated results from the upcoming resource expansion drill program will provide significant data for us to revisit the existing Mineral Resource estimate and assess potential future conversion of those resources to Ore Reserves.”