The Ravensthorpe Nickel Operation consists of five nickel deposits situated in Western Australia, Australia, 550 km southeast of Perth. The deposits are found in the southeast corner of the Archaean Yilgarn Craton, composed of granitoid gneisses interbedded with belts of metamorphosed sedimentary and volcanic rocks. The mineralization forms horizontal deposits from weathering and leaching. The area was first explored in the 1960s with first nickel produced in 2007. By 2009, BHP suspended the project and sold it to First Quantum the following year. First Quantum restarted the mine in 2011 but ceased production in 2017. Another restart occurred in 2020 and the mine was in operation at the time of publication of the technical report.
Ravensthorpe is mined as five open pits, with 366 Mt mined to 2040. LOM strip ratio is 1:1. The deposits are mined as relatively shallow pits. Ore is processed at a rate of 2.1 Mtpa as Limonite (90.3% recovery) and Saprolite (68.4% recovery). Average annual production is 28 kt nickel and 944 t cobalt. No additional non-sustaining capital is required and sustaining capital for LOM is US$185 M. An additional US$175 M closure cost has been allocated. Since the mine is operational, Ravensthorpe is not required to disclose economics of the project. Calculating revenues based on price, payable percentage, royalties, and costs reported, Mining Momentum estimates an NPV5% of US$1.5 B.
| Nickel | Cobalt | |
|---|---|---|
| Price (US$/lb) | 8.00 | 30.00 |
| Payable | 87% | 45% |
| Royalty (GRR) | 3.4% | 3.05% |
| Tonnes (Mt) | Ni (%) | Co (%) | Fe (%) | Al (%) | Mg (%) | Ca (%) | |
|---|---|---|---|---|---|---|---|
| Reserve | 195.78 | 0.57 | 0.03 | 0.00 | 0.00 | 4.10 | 1.50 |
| Resource M+I | 46.71 | 0.52 | 0.03 | 63.92 | 7.71 | 7.08 | 1.43 |
| Inferred | 68.26 | 0.52 | 0.02 | 11.80 | 2.40 | 5.00 | 0.90 |
| Ni (kt) | Co (kt) | Fe (kt) | Al (kt) | Mg (kt) | Ca (kt) | |
|---|---|---|---|---|---|---|
| Reserve | 1,116.3 | 58.7 | – | – | 8,023.7 | 2,935.5 |
| Resource M+I | 245.2 | 12.3 | 29,856.6 | 3,602.0 | 3,305.1 | 666.5 |
| Inferred | 355.0 | 13.7 | 8,054.7 | 1,638.2 | 3,413.0 | 614.3 |
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Project economics warrant further discussion. A quick look at LOM cashflow and profit margins are slim. It, therefore, comes as little surprise that Ravensthorpe has experienced several rounds of closures and restarts. This is once again showcased in 2024, when nickel and cobalt prices experienced a downturn to US$7.50/lb and US$12.95/lb respectively. Mining Momentum estimates an NPV5% reduction to $952 M. Cash flows 2034 and beyond are slightly above zero. Factor in capital costs, closure costs, and taxes and the viability of the project comes into question. An answer made apparent by First Quantum’s decision to shutter the operation in 2024.
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective Dec 31, 2021 (INSERT), with commentary from the author. Statements above do not represent the views of First Quantum Minerals. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.