BHP’s struggles to fill the Leinster nickel concentrator could open the door for junior nickel players, with Rox Resources estimating it would cost $48 million to bring its Fisher East nickel project into production as a toll milling operation.

Rox made the first discovery at Fisher East, 150km east of Leinster in the northern Goldfields, in 2012, and has since outlined a resource containing more than 50,000 tonnes of nickel metal.

In a scoping study released yesterday, Rox put an $87 million price on developing the mine as a standalone operation with a six-year mine life and 500,000 tonne per annum concentrator.

But Rox estimated it would cost just $48 million to enter production by processing ore through a third-party mill, cutting its payback time from 2.3 years to just 1.8 years.

Rox Managing Director Ian Mulholland said BHP had been open about its need to fill the Leinster concentrator as it aimed to extend the life of the Nickel West division, while Western Areas and Talisman Mining’s Cosmos and Sinclair concentrators could be options if the mothballed mills were reopened in the future.

“Those are three options — what I can say to you is we have raised the idea with BHP and they are open to the idea,” he said.

“One of the reasons for doing this scoping study was to evaluate that in a little more detail.

“We haven’t got any further with any negotiations with that.”

Fisher East would produce 7300 tonnes of nickel in concentrate a year at all-in sustaining costs of $US3.60 per pound as a standalone operation and $US3.80/lb if ore was processed elsewhere.

It would generate $146 million and $102 million in net cash flow respectively, assuming long-term prices of $US7.50/lb.

Mr Mulholland said there was reason to believe stockpiles of nickel worldwide were dwindling, putting pressure on prices, especially with a projected uptick in demand from the growing electric vehicle industry.

“If you look at presentations by a number of nickel parties, they’re all saying the same thing, and that’s all coming from the price forecasting people like Wood Mackenzie and CRU and so forth,” he said. “They all see there are shortages coming in nickel.

“Stockpiles are being depleted and potentially within two years we’ll get to the point where there are no significant stockpiles of nickel, in which case at that point there’s going to be signifi-cant pressure on the nickel price.”

Rox is well funded compared with other junior explorers, with $10.4 million after selling its stake in the Teena zinc project in the Northern Territory to Teck in 2017.

Rox also owns the remote Collurabbie nickel project east of Wiluna and is divesting its gold assets into the new Helios Gold initial public offering.

Image: Rox Resources Managing Director Ian Mulholland, Kalgoorlie Miner.