BCI Minerals unveils ‘robust’ and ‘financially attractive’ DFS for Mardie SOP project

BCI Minerals (ASX: BCI) has reported a “robust” and “financially attractive” definitive feasibility study for its Mardie salt and sulphate of potash (SOP) project in Western Australia’s Pilbara coast.

The company claims the study confirms Mardie as a potential tier one salt and SOP project, with possibly the longest life projects of its type identified in Australia for decades.

Commenting on the study BCI managing director Alwyn Vorster said it delivered positive outcomes in all key project areas and estimated the project had a potential net present value of more than $1 billion.

“An investment of $20 million has been made over the past 18 months to deliver the high-quality DFS and we will continue to de-risk and add value to the project over the next few months.”

“This should further increase lender and investor confidence, supporting funding solutions.”

Key DFS metrics

The DFS gives Mardie a pre-tax real net present value of $1.197 billion, with projected annual earnings before interest tax depreciation of $197 million.

This is from total forecast revenue of $22 billion and net cash flow of $10 billion over the estimated 60-year mine life.

To get the project up and running, total capital costs of $779 million are anticipated, which includes all production and port infrastructure, as well as contingencies, design, project management and growth allowances.

All in sustaining costs of SOP production are estimated at $310 per tonne (free on board), while AIS for salt are expected to average $20.3/t (FOB).

BCI noted the operating costs were competed with other WA operations, with the SOP costs sitting in the lowest quartile globally.

It is anticipated the project will generate 4.4 million tonnes per annum of high purity salt and 120,000tpa of premium SOP fertiliser.

Advancing Mardie

With a mounting long-term demand scenario due to a growing global population and the need for food, BCI predicts SOP and salt prices will remain “attractive”.

The company has also secured 13 non-binding salt offtake agreements and two non-binding SOP deals with buyers in Asia.

According to BCI, these agreements account for 100% of Mardie’s three-year salt production and 75% of the expected five-year SOP production.

A final investment decision is expected in the first quarter of 2021, with the company noting it was fully funded to this point.

BCI is then looking to begin construction in the second quarter of 2021, with first salt sales to start in mid-2024 and SOP shipments targeted for 12 months later.

BCI chairman Brian O’Donnell said the DFS confirmed Mardie as a “compelling” value proposition and that the board did not see any insurmountable obstacles to development.