Shares in the junior fell sharply this morning on the news, after the company exited a trading halt that commenced in late April.

 

It has secured commitments to raise A$5 million at 4.5c, including some $400,000 from directors and CEO Jean-Sebastien Boutet.

 

The raising was priced at 4.5c, a 48% discount to the closing price on April 29.

 

The company said the BFS gave it confidence in the viability in Minim Martap, which it said had the quality and scale to meet long-term demand at a time of supply shocks and other geopolitical events impacting bauxite supply such as the coup in Guinea and export bans in Indonesia.

 

Canyon claimed Minim Martap was positioned to produce some of the highest grade bauxite in the world for an initial 20 years of mining from 2026 at an average 5.4 million tonnes per annum grading 51.1% alumina.

 

Front-end engineering and design works are planned in 2023 and construction is targeted from 2024.

 

Ramp up to steady state production is expected to take until 2031, however output has been raised 28% over the prefeasibility to a nominal 6.4Mtpa.

 

Reserves are now 108 million tonnes at 51.1%, with resources of 1.03Bt at 43.5% and studies reportedly already highlighting areas that could deliver increased tonnages over time.

 

The BFS outlined an improved gross pre-tax net present value of US$425 million, up from $300 million, but at a lower internal rate of 22%. 

 

Average annual undiscounted free cash flows are estimated at $78 million with a payback of four years for the $253 million capital cost.

 

Prefeasibility work completed in mid-2020 outlined a 5Mt per annum stage one development costing an initial $120 million, however the higher capital cost is due to an increased investment in rolling stock that will substantially reduce operational expenditure and result in improved project economics. 

 

C3 cash costs are estimated at $30.89/t compared with an average expected bauxite price of $45.22/t. 

 

Bauxite pricing has been volatile and depressed during the COVID-19 pandemic and recent global events, but the company believes its pricing forecasts are conservative.

 

Boutet said the BFS had reduced project risks, delivered a robust and competitive proposition that should prove attractive to potential strategic partners.

 

The company has already lodged an application for a mining permit, and is seeking to formalise a mining convention with the government. 

 

The state will be granted a 10% free-carried interest in the project, and it has the right to invest for up to 25% in additional equity via a state corporation.

 

FID is anticipated for the direct shipping ore operation before the end of the year.

 

Canyon, which has traded between 4.8-14c over the past year, was worth $40 million today based on a 5.5c share price after its shares fell 37%.