PERTH (miningweekly.com) – An updated prefeasibility study (PFS) into the West Musgrave base metals project, in Western Australia, has increased the project’s net present value by some 25%, to around A$1-billion.

ASX-listed Oz Minerals on Wednesday told shareholders that the updated PFS had incorporated an increase in the processing plant throughput rate from the 10-million tonnes a year considered in the February PFS, to 12-million tonnes a year.

The increase in the throughput rate was achieved by leveraging additional grinding circuit capacity, based on further pilot plant test work, with minimal increases to the capital cost.

An updated probable ore reserve of 253-million tonnes grading 0.35% copper and 0.32% nickel was also declared for the Nebo and Babel deposits, representing some 22 years of the 26-year mine life demonstrated in the updated PFS.

The updated PFS has estimated that a pre-production capital spend of A$1.1-billion would be required to bring the West Musgrave project to production, compared with the A$995-million estimated in the original PFS, while the project’s post-tax net present value has increased from around A$800-million to around A$1-billion, and the internal rate of return has remained unchanged at 20%.

Average nickel production has been increased from around 22 000 t/y to around 26 000 t/y, while average copper production has increased from 28 000 t/y to around 32 000 t/y, while the mine life has remained unchanged at 26 years.

Operating costs for the project have declined in the updated PFS, from A$34/t to A$32/t, while C1 costs payable for copper have remained unchanged at 90c/lb, and C1 costs payable for nickel have increased from $1.30/lb to $1.40/lb.

“The updated PFS work showed that increasing throughput from 10-million to 12-million tonnes a year reduces the operating costs, allowing for an increase in the size of the openpits and results in an increase in both the mineral resource and the ore reserve,” said Oz Minerals CEO and MD Andrew Cole.

“The mineral resource and ore reserves also benefitted by incorporating updated metal price, exchange rate assumptions, and metallurgical test work improvements in the updated PFS.

“With the board approving further investment in the project, we will be able to create additional value by progressing the project to the next stage of study, prior to making a final investment decision in 2022,” Cole said.

Oz Minerals on Wednesday said that it would invest A$67-million to progress the study with a final investment decision on West Musgrave expected in 2022, with the potential for some earlier progressive funding milestones.

Key activities of the next stage of the study will include advancing regulatory approvals, infill drilling to increase the orebody confidence, engineering to increase capital and operating cost certainties, and ongoing engagement with the Ngaanyatjarra community to ensure they increase their understanding of the project and support its progression.

“The value uplift to West Musgrave has further strengthened Oz Minerals’ strong pipeline of organic growth opportunities. With 100% ownership of the project, we are now in a position to consider opportunities in the context of our pipeline and its timing and funding requirements with the objective of maximising shareholder value,” Cole said.