Australian Mines Unveils Robust Economics in Flemington Scandium Scoping Study

Flemington Project Delivers Strong Financial Signals

Australian Mines Limited (ASX:AUZ) has released a scoping study for its Flemington Scandium Project that paints a compelling picture of a long-life, high-grade scandium operation with strong financial upside. At a market-aligned scandium oxide price of US$3,000/kg, the project boasts a post-tax net present value (NPV8) of approximately US$860 million and an internal rate of return (IRR) of 74%. Even at a conservative mine design price of US$1,500/kg, the study indicates a robust NPV8 of US$270 million and a 32% IRR, underscoring significant leverage to scandium pricing.

The study’s cautious capital estimate of US$125 million supports a 60 tonnes per annum scandium oxide operation over a 28-year mine life, with shallow, free-dig open pits and conventional hydrometallurgical processing achieving 90.8% scandium recovery. The breakeven price stands at a competitive US$815/kg, highlighting the project's strong margin potential under conservative assumptions.

Resource Base and Processing Strategy

The project is underpinned by a Mineral Resource of 6.3 million tonnes at 446ppm scandium, with an average feed grade of 573ppm over the first 15 years. The mine plan processes approximately 2.1 million tonnes of oxide ore, predominantly classified as Measured and Indicated resources. This solid resource base supports a consistent production profile with a stripping ratio of 1.9:1, which could reduce to 1.4:1 if lower-grade waste material is stockpiled for future processing.

The processing plant design employs a conventional hydrometallurgical flowsheet, including high-pressure acid leaching (HPAL), solvent extraction, oxalate precipitation, and calcination, tailored to Flemington’s lateritic ore style. While nickel and cobalt by-products are recovered, they contribute only around 4% of revenue and are not central to the investment thesis.

Strategic Location and Market Dynamics

Located in central New South Wales, Flemington benefits from proximity to the Syerston Scandium Project and established regional infrastructure, including road networks and mining services. This strategic positioning in an emerging scandium district supports a low-risk development path with modest mining complexity.

Australian Mines’ internal market assessment supports the use of a US$3,000/kg scandium oxide price as a market-aligned sensitivity, citing factors such as recent Chinese export controls and sovereign procurement activities, including the U.S. Defense Logistics Agency’s plans to acquire high-purity scandium oxide at prices implying over US$6,000/kg. Peer projects like Syerston also use similar pricing sensitivities, reflecting a broader trend toward higher valuations for secure Western scandium supply. However, the scandium market remains immature and opaque, with limited transparent pricing data and significant price variability.

Funding and Development Pathway

To advance Flemington beyond this preliminary stage, Australian Mines anticipates requiring approximately US$125 million in pre-production funding. The company acknowledges the uncertainty around securing this capital and flags potential dilution or alternative value realisation strategies such as joint ventures or partial sales.

The scoping study’s ±35% cost accuracy and reliance on low-level technical assessments mean further definitive studies, including pre-feasibility and feasibility phases, are critical before firm development decisions. Key next steps include additional metallurgical testing, environmental baseline studies, hydrogeological investigations, and market engagement.

Australian Mines’ recent drilling success at Flemington, which revealed exceptional near-surface scandium grades, underpins the resource confidence and complements this scoping study’s findings, reinforcing the project's potential as a cornerstone critical minerals asset in Australia’s emerging scandium sectorhigh-grade scandium intercepts. Meanwhile, ongoing exploration success elsewhere, such as the record gold intercepts at Boa Vista, highlights the company’s diversified resource base and exploration momentumrecord gold intercept.

Risks and Market Sensitivities

The project’s economics are highly sensitive to scandium oxide pricing, exchange rates, metallurgical performance, permitting outcomes, and funding availability. The scoping study cautions investors against undue reliance on preliminary outcomes, noting that inferred resources contribute minimally to the mine plan and that further exploration is necessary to convert resources to reserves.

Environmental and social considerations have not revealed any fundamental barriers to development, but water supply remains a key area for further de-risking. Closure costs of approximately US$42 million are factored into the financial model, reflecting a comprehensive approach to project lifecycle management.