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Strandline takes FID on Coburn mineral sands project

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Global Mining Review,

Strandline Resources Ltd has taken its Final Investment Decision (FID) to develop the A$338 million Coburn mineral sands project in the Gascoyne region of Western Australia. Construction will commence immediately, with first production scheduled for the second half of 2022.

Coburn is 100%-owned by Strandline. The Coburn updated Definitive Feasibility Study (DFS), released in mid-2020, confirmed robust economics over an initial 22.5-year life, with a pre-tax NPV of A$705 million (A$: US$0.70, 8% discount rate) and high margin revenue-to-operating cost (C1) ratio of 2.4. The projected revenue for the initial 22.5 years of ore reserves is A$4.4 billion, with an average annual EBITDA of A$104 million.

Coburn’s development capital of A$338 million is fully-funded through to production and cashflow by a combination of debt provided by the Northern Australian Infrastructure Facility (NAIF) and the recent bond issue and equity provided by the company’s recent capital raising.

Coburn is set to capitalise on increasing global demand for critical minerals, including zircon, titanium and monazite, containing rare earths – products used in everyday life.

The company has five major binding offtake contracts in place for approximately 95% of Coburn’s forecast mineral sands production, estimated at approximately US$600 million (A$850 million at A$: US$ 0.70) over the first five years of operation. The offtake contracts are with some of the world’s largest mineral sands consumers, with more than 80% of production to be sold to major American and European customers with the balance sold into Asia. Negotiation on the remaining premium zircon product is advancing well.

Strandline Managing Director Luke Graham said the company’s decision to develop Coburn was fantastic news for Strandline, Western Australia and the mineral sands sector.

“The project capitalises on its robust technical and commercial fundamentals, and Western Australia’s strong position to support growing demand for critical minerals such as zircon, titanium, and rare earths,” Graham said.

“The project is set to benefit from increasing demand and falling supply of its critical minerals following years of under-investment in new projects.

“Coburn is a world scale project in a tier-1 location, and achieving FID is consistent with Strandline’s strategy to develop and operate high margin, expandable mining assets with market differentiation and relevance in the sector.

“The work completed by the Strandline team has allowed the FID to be taken based on strong project definition, providing confidence in schedule and cost estimates.

“Coburn will also provide significant public benefit, employment and new business opportunities as well as export income for the nation.

“Coburn is expected to generate 300 direct jobs during the construction phase and secure 150 jobs during operations over a multi-decade mine life.”

The Coburn mine life currently sees mining continue until 2045 (based on mining the initial 22.5-year JORC compliant Ore Reserves), with the potential to extend to 2060 (total 37.5 years mine life) by converting mineral resources which exist immediately north and along strike of existing ore reserves.

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Australian mining news