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neWs West Musgrave JV

(Oz Minerals 70%: Cassini Resources 30%)
Power to the February 2020 PFS 10 mtpa

Processing:
Life-of-mine : 26 years
West Musgrave Copper by the numbers: 28,000 tpa average production,
78% recoveries, $US0.90/lb C1 cost payable net of
by-product credits
Nickel by the numbers: 22,000 tpa average production,
here is probably no hotter topic than en- Stage 2 at Agnew. 69% recoveries, $US1.30/lb C1 cost payable net of
Tergy at the moment with pressure mount- The Agnew hybrid re- by-product credits
ing on governments around the world to lower newable project will be an Pre-production capital: $995 million
carbon emissions to counter climate change Australian first in the min- (excluding study)
and protect the environment. ing sector, with wind gen- Project payback from 6 years
Big carbon emitting industries such as min- eration incorporated as decision to mine:
ing are expected to change the way they op- part of the hybrid micro- Post-tax average net $190 million p.a.
erate and be better custodians of the planet. grid, culminating in 54MW
Since coming online in 2016, the De- of total installed genera- cash flow:
Grussa solar farm has reportedly reduced tion capacity and renewa- Post-tax NPV: $800 million
Sandfire Resources Ltd’s carbon emissions bles providing over 50% Post-tax IRR: 20%
by 30,789t and offset 11 million litres of diesel. of Agnew’s power needs. Decision to mine: 2021 (TBC)
The DeGrussa solar project, which pro- In 2018, energy de- Project start: 2024 (TBC)
vides about 20% of the mine site’s power, mands accounted for
was acknowledged as a “blueprint for the about a fifth of operating
adoption of renewable energy at other mine costs for Gold Fields – which also has renew- asset. However, further work is required in a
sites around the world” when Sandfire was able energy solutions at Granny Smith devel- future feasibility study to maximise the pro-
awarded the Golden Gecko Award for Envi- oped by Aggreko. ject’s power position. A gas pipeline remains
ronmental Excellence by the West Australian Emulating such cost savings and emis- a secondary option to be further investigated
Department of Mines, Industry, Regulation sions reductions is the goal for West Mus- during the next phase,” Cole said.
and Safety last year. grave JV partners Oz Minerals Ltd (70%) and Significant carbon emissions and power
It is encouraging that Sandfire is not peer- Cassini Resources Ltd (30%). costs can potentially be achieved by opting for
less when it comes to charging mine sites via Headlining the West Musgrave project is vertical roller mills as the means for grinding
renewable energy means, with Saracen Min- the Nebo-Babel copper-nickel deposit, some ore and a flotation flowsheet that achieves re-
eral Holdings Ltd recently going live with its 500km west of Uluru, taking in the borders of covery at a much coarser grind size, no doubt
solar farm at Carosue Dam which is expected Northern Territory, WA and South Australia. music to the ears of potential financiers taking
to produce 1,647MWh per year and result in So isolated is the West Musgrave province, a harder stance on ESG matters.
the reduction of 988 tpa carbon dioxide. the Oz/Cassini JV project stands to be one of Furthermore, establishing a remote opera-
Fellow WA gold producer and global min- the most significant in the region should fur- tions centre for the project means a smaller
ing outfit Gold Fields Ltd celebrated the start ther studies prove its viability. environmental footprint at site and less planes
of a landmark hybrid renewable project at Ag- Last month, a PFS on the West Musgrave carrying workers to and from one of the most
new in late 2019. JV indicated pre-production capital costs (ex- remote mine sites in Australia.
Stage 1 of the project entails a 23MW pow- cluding study costs) of almost $1 billion. Having advanced the West Musgrave pro-
er station integrating PV solar with gas and Keeping costs to within margins expected ject to PFS stage, concerns around the pro-
diesel generation to fuel Agnew. The collabo- in PFS outcomes while proving 70-80% of the ject’s location appear to be nullified, however,
rative work done between Gold Fields and project’s power needs can be met by renew- some analysts are wary of the big-ticket com-
EDL, a global distributed energy producer, able sources and supplemented by battery mitments Oz has before it.
is one of Australia’s largest hybrid renewable storage and diesel or trucked gas fired gen- West Musgrave is at the early stages of
microgrid projects and Stage 2 stands to test eration is now the aim, according to Oz chief funding and regulatory approvals, while Oz’s
the boundaries yet again. executive Andrew Cole. respective pipeline of expansion studies at
An 18MW wind generation, 13MW battery “The PFS base case assumes the power Carrapateena and Prominent Hill and expan-
and advanced micro-grid control system (due solution will be outsourced to a third party, sion ambitions in Brazil are worth taking into
for completion in mid-2020) is planned for with power purchased back over the life of the account, according to RBC Capital Markets
analyst Paul Hissey.
“Project sequencing will inevitably be the
A decision to mine at the West Musgrave JV project could be made towards the end of balancing act, with Oz management previ-
next year and operations started by late 2024, according to an indicative timeline (yet to be ously stating a desire to not progress two
finalised) by Oz/Cassini. Meanwhile, a maiden ore reserve of 220mt @ 0.33% nickel and 0.36% large-scale development projects in parallel,”
copper for 720,000t nickel and 790,000t copper from Nebo-Babel was announced in February
Hissey said in a research note.
“Whilst Oz provides growth potential for
those investors seeking copper exposure,
we retain our caution on the stock given our
views on the potential ramp-up risks at Car-
rapateena over the next 12 months, when the
project is mine constrained. We remain ‘Un-
derperform’.”
– Mark Andrews

Page 16 MaRCH 2020 aUSTRaLIa’S PaYDIRT