Black Canyon scoping study outlines attractive economics for the KR1 and KR2 manganese deposits
\nDeposits expected to produce 12Mt of manganese to deliver pre-tax NPV of $340 and IRR of 70%
\nPotential to grow mine life and produce higher grade concentrate <\/p>\n
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Special Report:<\/em> Black Canyon\u2019s Balfour manganese field in WA\u2019s Pilbara region is taking shape as an economically attractive project with plenty of opportunities for growth.<\/strong><\/p>\n In its scoping study, Black Canyon (ASX:BCA)<\/strong><\/a> envisioned the KR1 and KR2 resources within the field as being able to deliver an average throughput of 3Mtpa to produce 12Mt of manganese over a 16 year mine life.<\/p>\n This will generate life of mine revenue of $2.78Bn and EBITDA of $654m with average annual operating cashflow of $46.1m.<\/p>\n Unsurprisingly, this will also deliver strong economics as underlined by estimated pre-tax net present value (NPV) and internal rate of return (IRR) of $340m and 70% respectively.<\/p>\n BCA estimated capex at a very palatable $84m \u2013 including $25m of indirect costs \u2013 with payback expected in less than two years.<\/p>\n The company expects the project to produce a 33% manganese concentrate that can be sold for US$4.60\/dmtu with low all-in sustaining costs of US$3.38\/dmtu thanks in part to the low strip ratio of just 0.56:1, which means effort spent on mining waste material.<\/p>\n Most of the produced manganese concentrate will be used by smelters to produce non-substitutable alloys used in steel manufacturing.<\/p>\n A portion may also be used as feedstock for the downstream production of high purity manganese sulphate monohydrate (HPMSM), a critical precursor component of cathodes for batteries in electric vehicles.<\/p>\n The KR1 and KR2 projects within the Balfour manganese field. Pic: Black Canyon<\/p>\n \u00a0<\/p>\n BCA notes that there is considerable opportunity to extend the mine life through expansion drilling along with discovering substantial resources in the broader region.<\/p>\n It added that future studies will consider further project enhancements, including higher throughput, utilisation of low-cost surface miners in addition to conventional truck and shovel and a hybrid transport solution transitioning from contract to owner-based haulage.<\/p>\n There is also potential to integrate additional mineral resources managed by BCA targeting higher grade material with lower strip ratios within 20-30km of the planned processing plant.<\/p>\n Metallurgical studies and associated engineering design activities are planned, in preparation for detailed feasibility evaluation along with baseline studies to support permitting and environmental approval pathway.<\/p>\n \u201cThe scoping study has delivered substantially on the company\u2019s expectations for the KR1 and KR2 deposits,\u201d BCA managing director Brendan Cummins says.<\/p>\n \u201cEfficient mining with a larger trucking fleet matched with increased processing throughput has demonstrated the development potential of the project.<\/p>\n \u201cThe positive findings suggest significant financial return over a 16-year period, with a pre-tax NPV of A$340 million and IRR of 70%, highlighting the robust economics of the project,\u201d he says.<\/p>\n \u201cThe study also indicates competitive production costs and substantial manganese concentrate annual output.\u201d<\/p>\n \u00a0<\/p>\n Cummins says BCA is not resource constrained with multiple deposits with low strip ratios and higher grades from surface, which provide potential upside.<\/p>\n \u201cThe use of low-risk conventional dense media separation as a primary separation technique will be further evaluated with the processing of life-of-mine composite metallurgical samples and several variability composites,\u201d he says.<\/p>\n \u201cWhilst we are satisfied that we can deliver a standard 30 to 33% Mn concentrate our next objective is to improve on the grade with ambitions to produce a higher-grade concentrate as part of our product suite.<\/p>\n \u201cThe company can now focus on more detailed feasibility studies and prepare for the necessary permitting and environmental approvals, confident in the long-term market prospects for manganese products.<\/p>\n \u201cWe will also pursue investigations into opportunities to advance an HPMSM project in Australia with key government initiatives continuing to support downstream processing of critical minerals.\u201d<\/p>\n \u00a0<\/p>\n BCA\u2019s scoping study is based on inferred and indicated resources of 103Mt grading 10.4% manganese at the KR1 and KR2 deposits, which are about 115km northeast of Newman.<\/p>\n This includes a higher-grade subset of inferred and indicated resources of 29Mt at 13.3% manganese.<\/p>\n However, the KR1 and KR2 resources makes up just a third of the 314Mt at 10.4% manganese that the company has discovered in its 2100km2 area since exploration commenced in December 2021.<\/p>\n Several of these resources remain open while the large-scale mineralised system presents multiple development options with an exploration target of between 160Mt and 215Mt grading 11-12% manganese outlined over the Pickering and Balfour East deposits.<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span>\u00a0<\/p>\n This article was developed in collaboration with Black Canyon, a Stockhead advertiser at the time of publishing. <\/em><\/p>\n \u00a0<\/em><\/p>\n This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n The post Black Canyon scoping study highlights strong returns for Pilbara manganese play<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Growth potential and upcoming plans<\/strong><\/h2>\n
Shifting focus on feasibility studies <\/strong><\/h2>\n
Big resource already defined<\/strong><\/h2>\n