Robert Friedland and Jiang Zhaobai, Co-Chairmen of Clean TeQ Holdings Ltd and Sam Riggall, Chief Executive Officer, are pleased to announce the results of the Definitive Feasibility Study for the Clean TeQ Sunrise Project.
“The Definitive Feasibility Study confirms Clean TeQ Sunrise’s proven status as a globally significant cobalt, nickel and scandium resource which, once developed, will become a major supplier of critical raw materials to the lithium-ion battery market. Lithium-ion batteries represent an important enabler of the clean energy revolution, helping alleviate the profound environmental issues caused by the unconstrained burning of fossil fuels by the global transport sector. Being part of the solution is a core objective for Clean TeQ and a strategic driver to develop Clean TeQ Sunrise.”
Study Highlights include:
- The Definitive Feasibility Study models the first 25 years of production, with sufficient ore reserves to extend beyond 40 years. Strong cash flow supports a post-tax NPV of $1.392 billion (A$1.856 billion) and post-tax Internal Rate of Return (IRR) of 19.1%. The DFS assumes long-term metal prices of: Nickel: $7/lb + $1/lb sulphate premium (current nickel price: $6.73/lb); Cobalt: $30/lb (current cobalt price: $36.63/lb). High relative cobalt production results in extremely low average C1 operating costs of negative $1.46/lb Ni after credits and $4.68/lb Ni before credits.
- Average production post ramp-up of:
- 21,780 tpa nickel and 4,640 tpa cobalt (Year 2 – 6)
- 19,620 tpa nickel and 4,420 tpa cobalt (Year 2 – 11)
- 18,520 tpa nickel and 3,450 tpa cobalt (Year 2 – 25)
- Average scandium oxide production capacity of 80 t per year, which can readily be expanded to 160 t per year, with the DFS conservatively capping sales at 10 t per year for the life of mine. The potential exists to revolutionise the scandium market with a massive, low-cost source of supply in a stable Australian jurisdiction. Clean TeQ has existing agreements with companies including Airbus Group and Chinalco, to develop new light-weight aluminum scandium alloys for the aerospace and automotive sectors.
- Pre-production capital cost estimate of $1.33 billion (A$1.77 billion) (excluding $165m estimated contingency) reflects a significant increase in refining capacity, relative to the 2016 Pre-Feasibility Study (PFS), to provide the opportunity to increase production volumes. The estimate also includes conservative assessment of indirect costs through construction.
- Clean TeQ Sunrise is set to deliver significant economic and social benefits over many decades…including safe and well-paid employment, infrastructure upgrades, royalties, taxes and local community contributions.
- Steady-state operations workforce of approximately 300 people to generate strong employment opportunities in the state of New South Wales, Australia. The Project delivery model is to be determined during Q3 2018 with a final investment decision targeted for early 2019 and construction expected to commence shortly thereafter.
- Completion of Definitive Feasibility Study provides the platform to enable the acceleration of product offtake agreements and project financing. Value optimisation work continues to assess significant opportunities to reduce capex in areas of pre-assembly, modularisation, procurement and value-added engineering.
- Market demand for battery minerals remains extremely strong. YTD2018 global passenger plug-in EV sales were 418,000 units (up 66% year on year). Electric vehicle lithium ion battery sales in January-April 2018 were 12.3 GWh (up 60% year on year).
“The outstanding outcomes generated by the DFS confirm the strong technical and economic viability of the project. Next steps are to progress the project towards FID by the Board in early 2019 with the commencement of construction expected shortly thereafter. To achieve FID within the above timeframe, there are several key workstreams which need to be completed.”
Clean TeQ has two proposed delivery models for project execution; the Integrated Alliance model with SNC-Lavalin and McDermott and an EPC (Engineer-Procure-Construct) model using a Chinese contractor. Discussions are ongoing with the parties to ensure both proposals are thoroughly assessed with respect to delivered cost, risk and capability. The preferred model will be selected during Q3 2018 and any material impacts to the outcomes of the DFS will be reported.
Clean TeQ has been actively marketing to end users and intermediaries in the battery supply chain over the past 18 months. These discussions have progressed well and, with the DFS now complete, the company expects to sign further binding offtake agreements in coming months.
Clean TeQ has commenced some of the early works activities to prepare the Project for formal construction post-FID. These works include connecting the site to power and water, installation of the construction accommodation facility and early site works. Planning and works are well underway, with activity set to increase during the second half of 2018.
While a substantial volume of work has been completed as part of the DFS, there is a substantial body of work required to produce the final designs and detailed engineering to enable construction to commence as early as possible post FID. This work is underway and will continue through to the end of 2018.