African Eagle Resources plc announces that it has received a new economic model for the Dutwa nickel project from independent Perth based consultant Simulus. The model uses inputs from Snowden Mining Industry Consultants and AMEC Minproc, consultants engaged by the Company for the feasibility study.
This is the first iteration of the feasibility study economic model and it will be progressively refined as better information becomes available with the continued development of Dutwa. Currency in this announcement is expressed in US dollars, unless stated otherwise.
The key headlines are:
- Pre-tax NPV (10%) of $650M (£410M) at $8/lb nickel (currently ~$11.00/lb)
- Post-tax NPV (10%) of $385M (£245M) at $8/lb nickel
- IRR post-tax of 20% and capital payback under 5 years
- Annual production of 23,000t nickel and 582t cobalt over 26-year mine life
- Estimated initial Capex of $600M (£380M)
- Estimated average cash cost of $3.37/lb nickel
- Life of mine earnings of $8.2bn (£5.2bn) at $8/lb nickel
- Pre-feasibility study scheduled to be completed Q3 2011
- Definitive feasibility study to be undertaken in 2012
- First production anticipated in 2015
African Eagle's Managing Director Mark Parker comments: "We are delighted with the positive results from the updated economic model. They are a significant improvement over the results of the scoping study completed 18 months ago. The update takes account of all the new information obtained since then, especially the increase in the JORC resource from 32 to 98 million tonnes."
"The Dutwa project is situated 120km east of Mwanza, the second city of Tanzania. It will employ an operating workforce of approximately 400, plus additional contractors. The development can be expected to provide long lasting benefits to Tanzania, delivering significant direct and indirect taxes, and will be a catalyst for further public and private investment in the country."