Australian Mines secures $20 million to advance cobalt and nickel projects

Australian Mines (ASX: AUZ) has boosted its bottom line after securing a A$20 million placement – twice the A$10 million the company originally intended.

The company received applications from institutional fund managers for almost A$40 million, however, after consulting the board and other incoming investors, the A$20 million figure was settled on, which saw the issue of more than 235 million ordinary shares at A$0.085 each.

According to Australian Mines, the willingness of the global funds to invest in the company was seen as “strong endorsement” of its assets and management team.

Australian Mines is edging into electric vehicle, consumer electronic and sustainable energy markets by exploring and developing its cobalt-nickel-scandium projects in Queensland and New South Wales.

With nickel and cobalt being two of the primary metals that make up a lithium-ion battery’s cathode, many analysts predict the metals, particularly nickel, are facing a revival with much better prices forecast.

Sconi cobalt-nickel-scandium project

Located about 250km from Townsville in northern Queensland, the Sconi project is close to port, roads, electricity, housing, skilled workforce, water and telecommunications infrastructure.

The project has a maiden resource of 89 million tonnes grading 0.06% cobalt and 0.58% nickel.

According to Australian Mines, Sconi “is the most advanced project of its type in Australia” and has a minimum 20-year mine life.

At the end of September, the company conducted trial mining to produce an expected 160kg of nickel sulphate, 20kg cobalt and 5kg of high-grade scandium oxide by the end of December.

Once produced, the minerals will be sent to the company’s potential offtake partners to verify their end-use suitability in the battery market.

A bankable feasibility study is underway at the project and due for completion in April 2018.

However, an earlier pre-feasibility study found Sconi could produce 24,000 tonnes of nickel sulphate and 3,000 tonnes of cobalt sulphate a year.

Flemington cobalt-nickel-scandium project

In addition to Sconi, Australian Mines is actively exploring the Flemington cobalt-nickel-scandium project in New South Wales.

Last week, the company announced a maiden resource for Flemington, which it claims has merely “scratched the surface” of the project’s full potential.

Flemington’s initial resource sits at 2.7 million tonnes grading 0.1% cobalt, 403 parts per million scandium, for 2,744 contained tonnes of cobalt and 1,090 contained tonnes of scandium metal.

The maiden resource covers only 1% of the identified prospective area and Australian Mines believes the project has “significant” opportunity for growth.

Resource expansion drilling will start this month with a pre-feasibility study due for completion in mid-2018.