Alliance Nickel's NiWest Project: A Game-Changer in Nickel-Cobalt Mining
AXN (AXN) Share Update November 2024 Wednesday 20th
Alliance Nickel Unveils Promising NiWest Project Feasibility Study
Alliance Nickel Ltd (ASX: AXN) has announced the completion of its Definitive Feasibility Study (DFS) for the NiWest Nickel-Cobalt Project, highlighting a significant increase in ore reserves and promising financial metrics.
Instant Summary:
- 31% increase in NiWest Ore Reserve to 84.7 Mt.
- Projected average annual production of 20,000 t nickel and 1,600 t cobalt.
- Life-of-mine post-tax free cash flow of A$6.1 billion.
- First quartile AISC of US$4.84/lb nickel for the first 12 years.
- Pre-production capex of A$1.65 billion with a 5-year payback period.
Project Overview
The NiWest Project, located in Western Australia's North Eastern Goldfields, is set to become a leading producer of high-purity nickel and cobalt sulphate for the battery industry. The DFS confirms the project's viability with a 35-year mine life and a low strip ratio open-pit mining operation.
Financial Metrics
The DFS outlines a post-tax NPV8 of A$1.5 billion and an IRR of 17.6%. The project is expected to generate a post-tax free cash flow of A$6.1 billion over its life. The capital cost is estimated at A$1.65 billion, including contingencies, with a low life-of-mine sustaining capital cost of A$332 million.
Production and Cost Efficiency
Alliance Nickel plans to produce approximately 20,000 tonnes of nickel and 1,600 tonnes of cobalt annually for the first 12 years, with a first quartile AISC of US$4.84 per pound of nickel. The project will use a low-cost heap leaching process, enhancing its cost efficiency.
Strategic Partnerships and Market Positioning
The company has secured a five-year offtake agreement with Stellantis N.V., covering about 40% of annual production. This strategic partnership positions Alliance to capitalize on the growing demand for battery-grade nickel and cobalt, particularly in the electric vehicle sector.
The positive DFS results and strategic partnerships are likely to boost investor confidence in Alliance Nickel. The project's low-cost profile and strong financial metrics position it well in the competitive nickel-cobalt market, potentially leading to a favorable impact on the company's stock price.
Investor Reaction:
Analysts are optimistic about the NiWest Project's potential, noting its alignment with global trends in electric vehicle and battery storage markets. The strategic partnership with Stellantis is seen as a significant endorsement of the project's viability.
Conclusion:
Investors should consider Alliance Nickel's NiWest Project as a promising opportunity in the critical minerals sector. The company's strategic positioning and robust project metrics could offer substantial long-term returns.