Vermelho Nickel-Cobalt Project

 


Close Nickel Price US$/t
US$12,000/t
US$28,000/t
NPV8 post tax
IRR post tax
Free cash flow over LOM
(after capital payback)
Payback period
(after taxation)
Capital costs
*The above NPV Calculator is based on the Vermelho nickel project Feasibility Study.

Pt
 
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Developing the next major nickel project in Brazil

ECONOMICS

The PFS base case financial model was developed using a flat nickel price of $16,400/t Ni which is taken from a market consensus price distributed by CIBC. One other case was prepared; the Wood Mackenzie long term incentive forecast of US$19,800/t Ni. This additional price forecasts represent an upside scenario.

The PFS demonstrates robust economics for a 38 year mine, producing in excess of 30,000 tonnes per annum nickel. A discount rate of 8% was used for NPV calculations.

Project economics (post taxation)

    Nickel price basis (US$/t Ni)
Item Unit Consensus (16,800) Wood Mackenzie (19,800)
Net cash flow US$M 7,304 9,546
NPV8 US$M 1,722 2,373
IRR % 26.3% 31.5%
Breakeven (NPV8) Ni price US$/t 7,480 7,480
C1 Cost (Brook Hunt) US$/t 8,029 8,029
Production year payback years 4.2 3.6
LOM Ni recovered kt 924 924
LOM Co recovered kt 47 47
Average Ni production kt/a 24 24
Peak Ni Production kt/a 34 34
Total revenue US$M 19,034 22,175
Total costs US$M 11,729 12,629
Operating cash flow US$M 8,451 10,693

1 Average over initial 37 years of processing

Capital Cost Estimates

An initial capital cost of US$652 million is estimated for Vermelho
Area name Costs (US$‘M)
Process Plant 477.3
Mining pre-production 10.8
Tailings and sediment 24.1
Pumping 2.3
Powerline 14
Road 2.6
Permitting & Land Acquisition 23.2
Contingency 97.7
Total 652.2
Vermelho Project Economics

The capital cost estimate was built to an Association for the Advancement of Cost Engineering (AACE class 4) level which delivers an accuracy range between -25% and +20% of the final project cost (excluding contingency) with a base date of June 2019. All amounts expressed are in US dollars.

Vermelho C1 Costs

The initial 38 year mine life of the PFS design generates free cash flows after taxation of US$7.3 billion returning an IRR of over 26% on an initial capital cost of $US652 million (applying consensus nickel price of $16,400/tonne) and C1 cash cost of $8,029/t Ni during life of mine, $7,286 C1 cash cost in years 1-10.

Tier 1 Project: Low Cost & High Grade
Vermelho positioned in the lower quartile for nickel laterite projects on global C1 (Brooke Hunt) Cash Cost, $7,286 C1 cash cost in years 1-10

Vermelho  C1 Costs

Operating Costs

The mining and operating cost estimate (opex) was calculated for an operation producing 14,749t Ni per annum and is set out as an annual total and US$/t Ni in Table below, calculated as an average over the LOM.

Description US$/t nickel
Mining 1,062
Rejects & Tails Handling 448
Processing costs 6,261
Royalties 97
G&A & other costs 233
SHE 26
Total costs $8,126
OPEX: Mining and operating cost estimates for Vermelho project
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