TORONTO (miningweekly.com) - Denver, Colorado-based Geovic Mining is optimistic it can secure and sign off on a financing package and then start building its Nkamouna cobalt/nickel/manganese project by year-end, CEO Jack Sherborne said on Tuesday.
The mine, which is expected to be one of the biggest producers of cobalt in the world, was originally to have begun production this year.
However, the company, like many of its peers, put the financing process on hold in November 2008 amid turmoil in global markets, although it continued with optimisation studies and test work in the interim.
Geovic holds 60% of Geovic Cameroon (GeoCam), which owns the large Nkamouna project. The balance is held by the National Investment Corporation of Cameroon and local investors.
After settling on what it believes is a more efficient processing plan, and with growing interest from potential funders, GeoCam has started work on an updated feasibility study and Geovic announced last month that it had hired Standard Chartered to advise on project financing.
"We are about as confident about this project moving ahead right now as we have been for quite some time," Sherborne told Mining Weekly Online.
"We're going to try to move it just as fast as we can."
The feasibility study update is expected by mid-year, and the firm has already started evaluating financing options.
Sherborne said Geovic continues to look at conventional debt/equity solutions, but has also been eyeing some less traditional financing packages arranged by other companies in the last six months or so.
For example, an offtake agreement or strategic partnership could be tied to a debt financing package together with an equity interest in the project.
"That is a different approach to what we had been taking up until about a year ago, but it's a conceptual package that we are interested in pursuing. And we have had some interested parties that we have been discussing that type of opportunity with."
Overall, interest in mining projects has firmed considerably over the last few months, from institutions like development banks, but also from commercial banks, he said.
There has also been strong interest from Asian groups, including from China and Korea, looking to secure big offtake agreements.
A September 2008 study pegged the capital cost to build the Nkamouna project at $379-million, but Sherborne expects that figure will come down, given lower prices for some materials and other costs, plus the changes to the project that will be included in the feasibility study update.
"We are sort of targeting somewhere around $350-million for the capital cost right now," he said.
"But of course, it will be quite some time before we can really talk about that number definitively."
The adjustments to the processing technology were aimed at reducing the risk and improving the 'bankability' of the project and are expected to shave a bit off the capital cost because GeoCam has opted to manufacture intermediate, rather than finished, cobalt and nickel products, in addition to a finished manganese carbonate product.
Cobalt is used in gas turbine aircraft engines, batteries and catalysts.
While demand for the metal was relatively soft in 2009, the market appears to have begun strengthening over the last month or so, Sherborne said.
"My sense is that it will continue to strengthen. There seems to be quite a pick-up in the battery end of the cobalt market and that seems to be driving the demand a little bit.
"And this is likely to translate into slightly stronger prices as time goes by," he said.
The Nkamouna project contains measured and indicated resources of 120,6-million tons, grading 0,23% cobalt, 0,65% nickel and 1,34% manganese.
Inferred resources currently stand at 202,5-million tons, grading 0,2% cobalt, 0,59% nickel and 1,2% manganese.
The September 2008 feasibility study estimated total cash costs at $2,02/lb of cobalt, while direct costs, net of by-products, were forecast at negative $0,46/lb.
At the time, the mine life was estimated at around 19 years, but GeoCam announced in October it had almost doubled the measured and indicated resources.
This means it is likely the updated feasibility study will include increased reserve figures and an extended operating life.