Junior explorer Centaurus Metals (ASX: CTM) has entered into a “de-risking” joint venture with Perth-based Simulus Group, which will allow Centaurus to be free-carried through the exploration, resource evaluation and feasibility stages of its Itapitanga nickel-cobalt development in the Carajás mineral province of northern Brazil.
Under the terms of the staged, earn-in agreement, Simulus could earn up to 80% interest in the project by utilising its nickel-cobalt process design expertise to project manage Itapitanga through the various study phases with a view to delivering a low-capital intensity project.
Centaurus will provide in-country support on a cost-recovery basis, and be free‐carried through until project financing is arranged and a decision to mine is made.
Simulus has extensive global experience in managing nickel-cobalt laterite projects through development and into production.
It has previously conducted testwork and process design for similar nickel laterite projects in the Carajás, and is believed to have been drawn to Itapitanga due to the project’s relatively high nickel-cobalt grades which could result in a process flowsheet with low operating costs.
Favourable market
Centaurus managing director Darren Gordon said the partnership agreement with Simulus is a game-changer which will provide the “best possible chance” of delivering a profitable project in a favourable nickel-cobalt market.
“Simulus is at the forefront of process development for battery-grade nickel and cobalt sulphates worldwide,” he said.
“This joint venture is a major coup for Centaurus and for Itapitanga, and gives us a clear pathway through to development and production.”
Earlier this year, Mr Gordon said the Itapitanga project had “plenty of room to grow” with promising nickel and cobalt intersections from surface set to expand the scale and potential of the discovery.
Staged earn-in
The earn-in with Simulus will comprise four stages, commencing with the completion of a scoping study six months from execution of the agreement, at which point Simulus will be granted 21% equity.
The equity will boost to 49% on delivery of a feasibility study progress report 12 months after the scoping study, featuring core disciplines such as resource drill out and flowsheet optimisation.
Delivery of a definitive feasibility study six months after the progress report will see Simulus’ equity increase to 70%, with the final 10% being earned once financing arrangements and a decision to mine have been determined.
Once Simulus earns its final equity position of 80%, Centaurus will commence contributing to ongoing development costs on a pro-rata basis.
The earn-in agreement also includes a strategic partnership to evaluate new nickel-cobalt project opportunities in Brazil.
Should Centaurus or Simulus be presented with a new project within 75km of Itapitanga or a nickel laterite project elsewhere in the country, the companies have agreed to grant each other the first right to review and participate.
At mid-afternoon, shares in Centaurus Metals were trading 14.29% higher at $0.008.
