Lunnon Metals is considering alternative processing options for potential future ore from its Baker and Foster nickel deposits in Kambalda, Western Australia.
Lunnon had previously forecast that processing capital wouldn’t be required for the Baker nickel deposit since future nickel ore would likely be sent to BHP’s Nickel West Kambalda nickel concentrator as it was nearby.
Under this arrangement, BHP has a right of pre-emption regarding the treatment or sale of nickel or ore containing nickel from Lunnon’s current nickel assets, or to charge a one per cent royalty.
However, with BHP’s decision to temporarily suspend its Nickel West operations and the West Musgrave project amid the global nickel downturn, Lunnon is looking into other processing options for its Baker and Foster nickel deposits located near BHP’s Kambalda nickel concentrator.
Options include Lunnon initiating discussions with BHP Nickel West to either purchase, lease or make use of the Kambalda nickel concentrator and its associated infrastructure and utilities, studying the potential to build a new, right-sized concentrator, or re-purpose or utilise an existing processing facility.
“The company has been reviewing the potential to site a concentrator on the company’s tenements at Kambalda, where infrastructure, utilities and importantly tailing storage facilities are available,” Lunnon said.
“The company will keep the market informed of any progress in these potential discussions and negotiations.”
Lunnon assumes that while Nickel West is under care and maintenance, BHP may elect to receive the one per cent royalty.
In January, Wyloo – a major supplier to BHP’s nickel concentrator in Kambalda – decided to temporarily shut down the Cassini, Long and Durkin nickel mines it obtained through its acquisition of Mincor Resources.
Wyloo notified BHP and the WA nickel mines were placed into care and maintenance from May 31.
Wyloo’s decision to cease mining at Kambalda meant BHP couldn’t operate parts of its Kambalda concentrator, leading to BHP pausing part of its Kambalda processing operations, which took effect from June.
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