#Australia #Perth #Cannon Resources #Kinterra Capital #Fisher East Nickel

Cannon Resources Unveils Impressive Preliminary Economic Assessment for Fisher East Nickel Project

Cannon Resources Pty Ltd, a notable player in the nickel sector based in Western Australia, recently announced the results of a Preliminary Economic Assessment (PEA) for its flagship Fisher East Nickel Project. This assessment revealed a post-tax net present value (NPV) of approximately US$746 million, with an internal rate of return (IRR) nearing an impressive 54%. All monetary values are stated in US dollars unless specified otherwise.

Overview of the PEA

The PEA illustrates a solid and capital-efficient pathway to develop the Fisher East Project, solidifying its potential to evolve into a significant high-grade nickel sulphide operation in Australia. Among the critical highlights of the PEA, the following aspects stand out:

• - Post-tax NPV at 8%: US$746 million.
• - IRR: Approximately 53.8%.
• - First Quartile Cash Costs: Estimated at US$3.88 per pound of nickel equivalent, indicating a quick payback period of about two years.
• - Projected Mine Life: Spanning 15 years, with an average annual production of roughly 23,800 tonnes of nickel equivalent for the first 11 years.
• - Initial Capital Expenditure: Approximately US$247 million, representing a favorable NPV-to-capex ratio exceeding 3.0x.
• - Resource Increase: The mineral resource grew to 20.6 million tonnes at 2.2% nickel equivalent, showcasing a 175% increase in tonnage since Kinterra acquired the project in 2023.

The PEA envisions conventional mining supported by geotechnical and metallurgical testwork, which is designed to utilize centralized and compact surface infrastructure to facilitate operations across all deposits. Additionally, it anticipates nickel recovery rates of approximately 84.4%, yielding an 11% nickel concentrate, along with by-product credits from cobalt and palladium.

Management Commentary

Cheryl Brandon, Co-Founder and Co-Managing Partner at Kinterra Capital, expressed satisfaction with the PEA’s results, declaring, “The completion of the PEA marks an important milestone in Fisher East's development trajectory. The study establishes a clear, capital-efficient pathway to production supported by a high-grade resource, compelling project economics, conventional processing, and advantages of operating in a premier Western Australian jurisdiction.”

Chris O'Brien, Cannon Resources' VP and Project Director, elaborated on the extraordinary growth since Kinterra's acquisition, stating, “The growth achieved at Fisher East has been exceptional, with this growth underpinning the robust project economics with an IRR of greater than 50%. The PEA reflects a disciplined and integrated technical approach and positions Fisher East as a high-quality development asset.”

Resource Growth

Upon Kinterra's acquisition in early 2023, Fisher East had a Mineral Resource Estimate (MRE) of 7.5 million tonnes at 1.8% nickel, which contained 134,000 tonnes of nickel. However, following an extensive drilling campaign involving more than 228 diamond and reverse circulation drill holes over approximately 88,000 meters, the MRE has increased substantially to:

• - Resource Size: 20.6 million tonnes at 2.2% nickel equivalent (2.0% Ni), containing 444,300 tonnes of nickel equivalent (411 kt Ni, 10.4 kt Co, 229 koz Pd, 109 koz Pt).
• - Resource Increase: A 175% rise in resource tonnage and a 206% increase in contained nickel since 2023.
• - Grade Improvement: A 22% hike in nickel equivalent grade is attributed to the targeted approach towards higher-grade massive and disseminated sulphide zones.

Economic Metrics

The robust financial metrics detailed in the PEA were developed through collaboration between Kinterra and Cannon’s management, along with a team of specialized external consultants. Key metrics include:

• - Average Annual EBITDA (Years 1–11): Estimated at US$207 million.
• - Average Annual Free Cash Flow (Years 1–11): Projected at US$131 million.
• - Total Life-of-Mine Production: Approximately 294,000 tonnes of nickel equivalent across the project’s lifetime.

Conclusion

As Cannon Resources moves forward, it is actively seeking strategic partnerships for the Fisher East Project, which has garnered significant interest from potential offtake and co-investment partners as it advances towards a Final Investment Decision targeted for early 2029. This project not only promises impressive economic returns, but it also positions Cannon and Kinterra at the forefront of the nickel mining sector in Australia.

In summary, the Preliminary Economic Assessment for the Fisher East Nickel Project signifies a transformative step for Cannon Resources, showcasing a viable and rewarding pathway to nickel production while actively contributing to a sustainable mining future in Western Australia.