nickel30 Dec 2016 13:23
With nickel close to $11,500/t, BNC should be able to take advantage of their low C3 costs of around $5,000/t and produce nickel-in-concentrate in excess of 600/t per month (equal to 7,200/t pa).
With the price outlook for nickel more encouraging and the smelter taking shape ($19.5m committed and 71% complete), management is revisiting phase 2 of the shaft re-deepening project. On completion, it would extend the life of mine by about 5 years and give Trojan increased access to known ore reserves and potentially higher grades in advance of the smelter restart. As reported previously, Trojan’s concentrate can only provide sufficient output to meet 50-55% of the smelter’s total capacity and, without third party feed, it would not be running at optimum levels on present production. The re-deepening project could provide increased feed for the smelter and, equally important; allow exploration drilling to continue to evaluate resources below 45/0 level. It will cost approximately $5m to complete this project and extend the shaft system from 43/0 to 45/0 level. Management is exploring ways on how to mitigate its impact on production. To assist with bringing both of these projects to fruition in 2017, bondholders have agreed to place a 12-month moratorium on the principal Bond debt; in the meantime BNC will continue to make interest payments as normal. When the previous executive originally negotiated the $20m Bond, in 2014, it was assumed nickel prices would be higher and this moratorium gives BNC time to complete the smelter project and, hopefully, for nickel prices to increase further.
Nickel at $11,000/t or above would help increase margins and contribute to these capex commitments. A contract with a third party to supply concentrate would obviously improve margins.
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