Hub blows out to $2.1b
Feasibility study makes shock findings
INFLATION and a larger scale development has seen the estimated cost to build a battery metals refinery in Townsville blow out to $2.1bn, a feasibility study has found.
Asx-listed Queensland Pacific Metals released its Advanced Feasibility Study on Monday which shows the Townsville Energy Chemical Hub project has “strong financial metrics”.
But the study was not well received with the company’s share price falling 25 per cent to around 13c on a high volume of trade during the day.
Commenting on the release, QPM managing director Stephen Grocott said the findings represented “a moment in time” and was the culmination of the hard work from QPM, its engineering specialists Hatch and other consultants.
“However, the work does not stop here … as we now continue to work on the project and advance towards a final investment decision in parallel with our funding initiatives,” Dr Grocott said.
The feasibility study focused on a stage 1 project with an annual nameplate capacity of 1.05 million dry metric tonnes of ore to produce 15,992 tonnes of nickel sulfate sulfate, 1746 tonnes of cobalt sulfate, 607,395 tonnes of hematite, 4000 tonnes of high purity alumina and 28,856 tonnes of magnesium oxide.
A scoping study for a stage 2, doubling the capacity, was also released.
The stage 1 capital cost including contingency was $2.1bn and delivered a pre-tax Internal Rate of Return of 18.4 per cent.
QPM said the capex estimate had an accuracy range of minus 15% to plus 24% and compared well with a prefeasibility estimate of $650m in 2020 considering the plant’s scale had been increased by 2.7 times and the global equipment cost inflation of the past two years.
The company said it would continue engineering work to improve cost accuracy, primarily on iron hydrolysis, aluminium removal and nitric acid recovery and recycling.
It said a debt financing due diligence process, led by advisers KPMG, would commence immediately and would include the Northern Australian Infrastructure Facility, Export Finance Australia, Korea’s KSure and other export credit agencies and commercial banks.
The company wants to begin construction in the Lansdown Eco-industrial Precinct about 50km west of Townsville by mid-next year with first production scheduled for the last quarter of 2025.