If we look at a long section of Cosmos we can see that Mt Goode sits less than 500m south of the main historical Odysseus open pit. It has a resource of 53mt @ 0.6% nickel. It's the same or better grade then most of BHP's current open pit operations. But I would assume the issue with developing it is the grade. In order for the economics to make sense I think you either need to put it through someone else's mill or build a new big concentrator (somewhere close). At the right nickel price you could probably justify building a new concentrator.
You wouldn't put the ore through the concentrator at Cosmos unless you expand the mill because the Odysseus underground is giving you +2% nickel ore. You also wouldn't truck it to their Cosmic Boy concentrator because you'd be trucking ore that has a net value of ~A$90/t over 700km.
Looking at a regional map we can see that Cosmos sits inbetween BHP's Mt Keith and Leinster nickel projects. BHP has 3 nickel concentrators in WA - one at Mt Keith, one at Leinster, and one at Kambalda.
Yakabindie, which is an open pit satellite/extension to Mt Keith, is currently supplying the ore to the Mt Keith concentrator. The concentrator at Leinster is supplied by a mix of ore from Rocky's Reward, Perserverance, Venus, and the Leinster mini-block cave. I think some low-grade ore from Cliffs can also go to both of these concentrators as it improves the Fe:MgO ratio.
When Dan mentioned on the call that there's two concentrators nearby I believe he means Mt Keith and Leinster. He also mentions that one of the concentrators would be well suited to the Mt Goode ore. I assume he means Mt Keith given the ore at Mt Goode is probably similar to what BHP is currently mining.
The concentrator at Mt Keith is getting expanded from 12mtpa to 15mtpa but at the moment it probably doesn't make much sense for ore from Mt Goode to be tolled at the Mt Keith concentrator because BHP has enough resources at the Yakabindie/Mt Keith deposits. They've stated that their "aspiration" is to grow the capacity of the smelter at Kalgoorlie to around 110-120ktpa. They'd probably only toll treat ore from Mt Goode if they plan on even larger expansions to the Kalgoorlie nickel smelter...or if they owned Cosmos.
BHP Nickel West's main issue is that most of their big open pit deposits have low Fe:MgO ratios. Ratios at Mt Keith can be as low as 1.5x and BHP notes that the effective lowest Fe:MgO ratio concentrate blend they can smelt is around ~5.3x. This is why the ore from third parties such as WSA, MCR, and IGO is strategic to them (because they're higher Fe:MgO deposits, which allows BHP to improve the quality of the overall concentrate blend going into the Kalgoorlie smelter).
WSA Price at posting:
$3.04 Sentiment: Buy Disclosure: Held
