Centaurus Metals to increase Brazilian nickel concentrate production following positive Jaguar feasibility study

Centaurus Metals (ASX: CTM) is preparing to step up activities at its Jaguar nickel sulphide project in northern Brazil after receiving positive feasibility study (FS) results.

The FS has identified the capacity for Centaurus to achieve a strong financial return from an initial concentrate-only project, delivering a long-life production profile with first quartile operating costs.

The FS confirmed Jaguar’s potential to generate post-tax operating cash flow of $3.1 billion through an initial operation mining open-pit nickel sulphide ore over an 18-year mine life.

Robust financials

Other financial highlights of the FS include a low pre-production capital expenditure of around $557 million, a post-tax net present value of $997m and an internal rate of return of 31% per annum.

The confidence provided by the robust FS has led the Centaurus board to commit to completing targeted value engineering activities, actively advancing partnering discussions to support the required funding of the project and undertaking any necessary pre-development activities required to continue to meet the overall project development timeline.

‘Cornerstone asset’

Managing director Darren Gordon says Jaguar represents a cornerstone asset for Centaurus as it progresses its plans to create a diversified Brazilian critical minerals business.

“The completion of this high-quality FS marks the culmination of two years of effort and represents a pivotal milestone for our shareholders and our key stakeholders in Brazil,” Mr Gordon said.

“The compelling economics and forecast financial returns outlined in the study confirm Jaguar’s outstanding fundamentals and our long-standing belief that we have one of the world’s best new nickel sulphide projects, both from an economic and sustainability perspective.”

Low operating costs

Jaguar’s economics place it in the first quartile of operating costs at approximately US$2.30 per pound of nickel and the associated free cash flows that are generated over the initial 18-year mine life.

This has provided Centaurus with a high degree of confidence that Jaguar will be financially viable in any future nickel price environment.

The low cash costs are largely driven by the renewable power that will supply the project via the 230-kilovolt Brazilian national grid, state-based indirect tax incentives associated with operating in the Carajás mineral province and the favourable Brazilian real exchange rate.

The project also benefits from the size of the asset with a maiden Jaguar JORC ore reserve measuring in at 63 million tonnes at 0.73% nickel for 459,200 tonnes of contained nickel.

Partnership discussions

Centaurus continues to advance strategic collaborative discussions, with the company actively engaging with a range of potential partners who have indicated strong strategic interest in the project.

A number of these groups have also assessed the suitability of the Jaguar concentrate product for their respective downstream processing routes.

“Work will also continue to optimise the overall project based on an initial concentrate-only project, in line with our strategic decision in March this year to stage the project implementation in two phases, consistent with current market conditions,” Mr. Gordon said.

“This work has the potential to yield further significant upside—and will be undertaken in parallel with the ongoing strategic partnering discussions.”

The study also highlighted a number of opportunities to significantly expand the scope and earning capacity of the project.