Alliance Nickel Unveils $1.5B NPV NiWest DFS Backed by Stellantis and Samsung

Definitive Feasibility Study Highlights

Alliance Nickel Ltd (ASX:AXN) has announced the successful completion of the Definitive Feasibility Study (DFS) for its flagship NiWest Nickel-Cobalt Project in Western Australia. The DFS confirms NiWest as a commercially attractive, long-life project with robust economics and strong environmental, social, and governance (ESG) credentials. The study underscores the project's competitive edge, positioning it firmly within the first quartile of All-In Sustaining Cost (AISC) at US$4.84 per pound of nickel over the first 12 years of production.

Financially, the DFS delivers a post-tax net present value (NPV8) of A$1.5 billion and an internal rate of return (IRR) of 17.6%, with a payback period estimated at five years. The pre-production capital expenditure is forecast at A$1.65 billion, encompassing processing facilities, infrastructure, and pre-stripping activities. The project’s 35-year mine life is supported by a significant Ore Reserve increase of 31%, now standing at 84.7 million tonnes grading 0.94% nickel and 0.06% cobalt.

Strategic Positioning and Market Alignment

NiWest is designed to produce premium, high-purity, US Inflation Reduction Act (IRA) compliant nickel and cobalt sulphates, critical inputs for battery cathode manufacturers. Average annual production is projected at approximately 20,000 tonnes of contained nickel and 1,600 tonnes of contained cobalt over the initial 12 years. The project’s alignment with the Australian Federal Government’s critical minerals strategy enhances its sovereign capability credentials, focusing on onshore processing and value addition.

Alliance’s strategic partnerships with Tier 1 global automaker Stellantis NV and battery materials giant Samsung SDI further validate NiWest’s market relevance. Stellantis has committed to a five-year binding offtake agreement for around 40% of NiWest’s annual production, while discussions with Samsung SDI continue regarding future offtake and potential equity participation. These collaborations position NiWest to supply the rapidly expanding North American and global electric vehicle (EV) battery markets, especially as gigafactory capacity grows.

Operational and Environmental Considerations

The DFS outlines an open pit mining operation with a low strip ratio, utilizing conventional load and haul techniques with limited blasting. The processing approach employs heap leaching followed by solvent extraction and crystallisation, enabling low-cost production of battery-grade nickel and cobalt sulphates with a reduced carbon footprint compared to more complex High Pressure Acid Leach (HPAL) methods.

Environmental baseline studies conducted during the quarter revealed no significant concerns, supporting the project’s Major Project Status awarded in May 2024. The project also benefits from proximity to existing transport infrastructure, including rail facilities at Malcolm Siding and ports at Esperance and Fremantle, facilitating efficient logistics for reagent imports and product exports.

Financial Position and Next Steps

Alliance reported a cash balance of A$2.37 million at quarter-end, supported by a fully drawn unsecured loan facility of A$4 million extended by major shareholder Zeta Resources Limited. The company received a $1.37 million R&D tax refund during the quarter, aiding working capital. Expenditure focused on advancing the DFS and regulatory compliance, with no mining development or production activities undertaken yet.

With the DFS endorsed by the Board, Alliance plans to commence low-cost project implementation activities in 2025, subject to securing funding. The company remains engaged in detailed discussions with existing partners for potential strategic investment, a critical step toward project development.

Market Outlook and Industry Context

Despite near-term nickel market oversupply projections for 2025, Alliance remains optimistic about long-term demand driven by the global transition to EVs and renewable energy technologies. The International Energy Agency forecasts EVs will comprise around 25% of global car sales in 2025, increasing to 30% in 2026, underpinning sustained growth in nickel and cobalt consumption. Meanwhile, cobalt market oversupply is expected to ease, with demand for EV batteries steadily rising.

Alliance’s NiWest Project, with its low-cost, sustainable production profile and strategic partnerships, is well positioned to capitalize on these trends. However, the company acknowledges risks related to future funding, commodity price volatility, and regulatory approvals that could impact project timelines and outcomes.