Emerging mineral sands producer Strandline Resources (ASX: STA) has announced a final investment decision to proceed with full development of its wholly-owned $338 million Coburn project in the Gascoyne region of Western Australia.
Construction is expected to commence immediately, with first production scheduled for the second half of 2022.
An updated definitive feasibility study released last year confirmed Coburn’s robust economics over an initial 22.5-year mine life, with a pre-tax net present value of $705m and projected revenue of $4.4 billion, with an average annual EBITDA (earnings before interest, tax, depreciation and amortisation) of $104m.
The project’s development capital will be fully-funded through to production and cashflow by a combination of debt financing provided by the Northern Australian Infrastructure Facility and a recent Bond issue, as well as the proceeds of a March capital raising.
Strandline has secured binding offtake contracts with some of the world’s largest mineral sands consumers for approximately 95% of Coburn’s forecast mineral sands production, estimated at $850m over the first five years of operation.
More than 80% of production will be exported to major American and European customers, with the balance sold into Asia.
Negotiations on sales of the remaining premium zircon product are advancing.
Managing director Luke Graham said Coburn would capitalise on global demand for critical minerals used in everyday life including zircon, titanium and monazite containing rare earths.
“This project is set to benefit from increasing demand and falling supply of critical minerals following years of under-investment in new projects [worldwide],” he said.
“Coburn is a world-scale project in Tier-1 location, and achieving the final investment decision is consistent with [our] strategy to develop and operate high margin, expandable mining assets with market differentiation and relevance in the sector.”
The project is expected to generate 300 direct jobs during construction and secure 150 jobs during operations over its lifespan.
Mining will currently continue until 2045 with the potential to extend to 2060 by converting mineral resources which exist immediately north and along strike of existing ore reserves.
Coburn’s development is based on conventional mining and rehabilitation methods combined with state-of-the-art processing and power generation technology (including renewable energy) for the recovery of high-quality mineral sands products.
Strandline recently awarded a string of major contracts covering approximately 80% of the construction scope, and procurement is advancing for the remaining project activities.
“We are committed to building a highly-efficient and sustainable mining operation,” Mr Graham said.
“This project is set to generate significant public benefit including job creation, a high level of local industry participation, opportunities for local business and indigenous engagement, and capital inflows for Australia.”