Consolidated Nickel Mines
Munali nickel mine Zambia near term production
Company Exposure
Nickel Producer
Company Listing
Consolidated Nickel Mines
Stock Code
PRIVATE
Company Overview
Consolidated Nickel Mines (CNM) is a private nickel developer focused on the Munali Nickel Project 70km South West of Lusaka, Zambia. Operations at Munali ceased in November 2011 due to low nickel prices and poor operational performance by previous owners, Jinchuan. CNM acquired the rights to use all of Munali’s mine resources and infrastructure through a leasing arrangement from the previous owners.
CNM believe the company is well positioned to develop the mine at a lower cost level than the previous owners and is well positioned to produce a Nickel Sulphate NiSO4 product that will supply the developing battery market.
Company Strategy
CNM’s strategy is to acquire underperforming base metal assets and apply modern mining methods and novel applications of metallurgy to improve the economic performance of mines that have had significant capital invested.
CNM have recently raised US$20m and is seeking a further US$40m through equity and debt instruments to commence mining at Munali.
Munali Mine Robust Project Returns
- Short-run to cash flow positive driven by competitive operating costs and low start-up capex requirement
- Targeting low cost 30-40kt/pa Ni concentrate over >7yr LoM
- Saleable products: 12% Ni Conc :4,500tpa Ni, 200tpa Cu, 200tpa Co, 6,400oz PGM 25% Cu Conc : 500tpa Cu, 6,300oz PGM
- Forecast Opex costs of approx. US$ 7,000/t nickel produced
- Estimated US$40m to commence start-up within 6 months
- Targeted annual revenue of US$56m (Ni price US$15,000/t)
- NPV8% – US$36.7m and IRR – 33.5% (7yr LoM)
- NPV8% – US$74m and IRR – 39.8% (10yr LoM)
- Free to sell nickel concentrate off-take contract
- Potential to further beneficiate to sulphate or metal
Re-Strategy And Strategic Relationships
Current Position
- Ongoing care and maintenance costs at current staffing level $5m per annum
- Project cash positive at current nickel prices
- Decision made to finance re-start at $40m capital
Financing options
- Mining fleet financing in advanced discussion
- Light vehicle financing in advanced discussion
- Offtake finance $20m under discussion with traders
- Offtake finance and nickel sulphate project finance under discussion
- Equity finance – private
Team
Simon Purkiss – Chief Executive Officer
Craig Bailey – Chief Operating Officer
Strategic Shareholders
- CE Mining
- CE Mining II
“demand for nickel could reach 400,000 tonnes should electric vehicles reach 10 per cent of the global fleet, enough to cause a supply deficit” Glencore Chief Executive Ivan Glasenberg
Increase Demand – Electric Vehicle (EV) Growth
- Market in deficit 2016 onwards
- Supply closures on ferronickel side
- Chinese stainless demand strong
- Stock reducing from highs
- New demand source – batteries
- 20% growth in battery demand 2016
- EVs 40kg nickel per car (80kg copper)
- 5m EVs in China within 5 years
- 400kt of new nickel required
- 5m EVs in ROW?
- Renewable storage batteries?
- Battery grade nickel from sulphides
- Reducing supply from current mines (grade, tonnes)
- Forecast 20% sulphide supply to batteries within 5 years
Increase Demand – Electric Vehicle (EV) Growth
- High grade ore, Indonesia, produces HG NPI, direct 300 stainless feed
- Low grade ore, Indonesia and Philippines produces LG NPI, partial feed to 300 stainless
- Balance made up of other nickel sources such as scrap and refined nickel
- Limit to amount of LG NPI that can be consumed in stainless process so limit to amount of utilised LG Ore
- LG Ore price to decouple from nickel price, dampening rising nickel price affect on Chinese stainless steel cost
Nickel Silphate NiSO4 – Market Opportunity
- Lithium Ion (Li) batteries are used for storage of energy, for plug-in electric vehicle (PEV) and static storage markets
- Nickel will play a key role in developing battery technology due to high energy density.
- Nickel-containing battery technology, specifically battery cathodes, is an essential component in the development of electric vehicles
- Nickel Sulphate is the primary nickel product to meet this demand (most laterite, NPI and FeNi will not be able to produce a competitive nickel product).
- Nickel Sulphate currently trading at a premium to LME nickel prices.
- Tesla expects to produce 35 GWh worth of batteries/Energy storage in 2018, if one assumes 2kg of Nickel per kwh, that would mean a 70k ton demand for Nickel Sulphate just for Tesla.
- Battery size range for fully Electric from 6kwh (Renault Twizy) to 100kwh (Tesla S) – Averaging around 25Kwh
Investment Summary
- Leveraging off US$180m historical spend on mine, plant and infrastructure
- Strong Government and Community support with all key mine infrastructure and permits in place
- Company de-risked with CSR commitments cleared, water security improved, costs reduced
- Key technical operating management in place at site
- Robust project returns with short-run to cash flow positive, driven by competitive operating costs and low start-up Capex requirement (US$40m)
- Exploration potential both down-dip and in region
- Value add product of metal or battery-grade sulphate demonstrated and pilot and feasibility study step to start. Separate financing planned
- Expert project development team with African operating experience, proven mine restart capabilities and a track record of delivering superior shareholder returns
- Financing of restart underway
[easy-social-share buttons=”facebook,twitter,google,linkedin,print,mail” counters=0 style=”icon” template=”clear-retina” nospace=”yes”]
