Gladstone Nickel Project Feasibility Study remains financially robust
with an updated Profit after Tax and Interest in first year of full
production of US$538 million.
TORONTO, June 19 /CNW/ - The Managing Director of the Company, Mr John
Downie, announced today the updated financial results of the Feasibility Study
for Stage 1 of the Gladstone Nickel Project ("the Project") ("IDFS").
"The Company regularly monitors the effect of changes in key input
assumptions, such as Nickel, Cobalt and Sulphur prices and exchanges rates, on
the financial results and will provide updated financial results to the market
where the effect is significant," he said.
As a result of this monitoring the Company believes that recent changes
to these key inputs would have a significant effect on the IDFS financial
results and therefore the results announced on 18th January 2008 have been
In spite of the negative effects of lower nickel prices and a stronger
Australian dollar the project continues to be financially robust. Gross
Revenue in the first year of full production, assuming a two year ramp up, is
expected to be US$2,043 million per year, US$374 million lower than previously
announced whilst EBITDA is US$1,019 million, down US$354 million. Projected
profit after tax and interest in the first year of full production has been
revised from US$635 million to US$538 million in real terms at a gearing ratio
of 70% debt for a 10 year loan period and an interest rate of 8.5%.
Cash operating cost for the Project has been revised from US$2.77 to
US$2.38 per pound of nickel net of by product credits, due to nickel price,
cobalt price and exchange rate movements. The Project net present value
("NPV") is US$2,331 million ((*)see note below) using an 8% discount rate and
commodity prices and exchange rates as at 30 May 2008. This compares to an NPV
of US$4,322 million reported in January.
The capital cost, also reported in the 18th January 2007 market release
has been revised to US$3,840 million from US$3,656 million. The Directors
believe that the Company's association with China Metallurgical Construction
(Group) Corporation ("MCC"), based on MCC's prior experience, will reduce the
These changes are not expected to affect planned production and the plant
can expect to produce up to 64,753 tonnes of nickel and 6,164 tonnes of cobalt
in the first year of full production which is expected to be 2015.
(Note: Refer to background table of financial outputs, KPI's and major
This news release includes certain statements that may be deemed
"forward-looking statements". All statements in this news release, other than
statements of historical facts, that address future exploration drilling,
exploration activities and events or developments that the Company expects,
are forward looking statements. Although the Company believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those in
forward-looking statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include metal prices,
exploration success, continued availability of capital and financing, and
general economic, market or business conditions.
Outputs from Financial Model Unit Current
Real NPV @ 8% Discount Rate, 100% equity
after Tax US$M 2,331
IRR % 13.42%
KPI's in First Year of Full Production
Nickel Production tonne 64,753
Cobalt Production tonne 6,164
C1 cash cost after credits US$/lb 2.38
Free Cash Flow US$M 751
EBITDA US$M 1,019
Major Input Variables (as at 30 May 2008)
Nickel Price US$/lb 9.96
Cobalt Price US$/lb 47.25
AUD:USD AUD:USD 0.9564
Sulphur Price (FOB Vancouver) US$/tonne 420
Capital Cost at relevant exchange rates US$M 3,840
The consumption rates of reagents and consumables have been estimated by
Aker Kvaerner Australia Pty Ltd as part of their role in completing the IDFS.
Prices for key reagents have been based on current prices in January 2008. In
addition, shipping costs have been calculated based on 10 year long term
shipping contract rates provided by industry experts.
A comprehensive labour list has been developed for the proposed
operations with an estimated 530 employees required at the Gladstone plant.
Labour rates have been based on industry surveys in the Gladstone region.
Maintenance material costs for the refinery were estimated at
US$40 million per year based on percentages of direct capital costs of plant,
equipment and infrastructure. Additional mine maintenance estimates were
provided by mining consultants IMC Consultants Pty Ltd and SRK Consulting Pty
Ltd for both Marlborough and New Caledonia respectively.
Average expected feed grades from the mines are expected to produce
nickel metal of 63,952 tonnes per annum and cobalt of 6,114 tonnes production
per annum for the first 10 years of full production in Stage 1.
For further information:
For further information: Enquiries to: John Downie, Chief Executive
Officer, Gladstone Pacific Nickel, Tel: +61 (0) 7 3231 7100; Fiona Owen, Grant
Thornton Corporate Finance, Tel: +44 207 383 5100; Simon Rothschild, Bankside
Consultants, Tel: +44 207 367 8888