Amur Minerals (LON:AMC) is considering building its own smelter to handle ore from Kun-Manie after internal studies showed earnings from the nickel deposit in Far East Russia would triple.
Originally, Kun-Manie was costed using a toll processing option, but following a precise definition of the nickel sulphide concentrate to be produced Amur reckons there are three products open to it.
Using the best case of these, underlying earnings [EBITDA] rise to US$3.48bn compared to US$1.17bn under a toll option with a nickel price of US$ 7.50 per pound or US$ 16,530 per tonne.
Amur said it will now asses the capital costs of the smelting options, which vary substantially, to determine the best design and product of the three options for Kun-Manie.
Robin Young, Amur Minerals’s chief executive, said an owner-operated smelter along the Baikal Amur Rail system could substantially increase the economic potential as Kun-Manie has the potential to support a long term, large scale operation.
“This increased scale indicates that the construction of a captive smelter is likely to be highly beneficial to Amur.
“A near tripling of the EBITDA from contract smelting is highly encouraging.
“Our last step in the assessment is the determination of the capital cost for the smelting option and the three products that could be generated.
“This will allow for the definition of the base design of Kun-Manie. We look forward to releasing the final results of the smelter analysis in due course."