Western Australia-focused Lunnon Metals said on Monday that its Baker and Foster nickel sulphide projects remained potentially viable operations, even amid ongoing weakness in the nickel market, after completing a scoping study.

The company’s assessment, based on 91% measured and indicated resources and a nickel price of A$23 000/t, shows that Baker could generate about A$70-million in pre-tax free cash flow and deliver a net present value (NPV) of A$50-million. Foster is estimated to break even, with a pre-tax free cash flow of about A$30-million and an NPV, using an 8% discount, of A$4 million. Both mines are forecast to produce about 3 500 t/y of nickel over operating lives of four to four-and-a-half years.

The scoping study recommends sequential mining of Baker and then Foster. Baker is fully permitted, while Foster is cleared for re-entry, dewatering and underground exploration. However, the company stressed that processing remains a key uncertainty owing to the ongoing shutdown of BHP’s Kambalda concentrator, currently under care and maintenance until at least February 2027. As a result, the study cannot yet support reporting ore reserves, and no processing agreement is in place.

All-in costs are estimated at A$393/t for Baker and A$494/t for Foster. Pre-production capital is forecast at A$27-million for Baker and A$57-million for Foster. If the projects proceed sequentially, Lunnon believes Baker’s free cash flow could help fund Foster’s development, though this remains contingent on nickel price improvements and securing processing capacity.

The company stated that it remained gold-focused in the near term but noted that the scoping study was a reaffirmation of the underlying value of its nickel assets.

MD Edmund Ainscough said the study highlighted the leverage the Baker and Foster deposits offered in a stronger nickel price environment. “The analysis completed in this scoping study appropriately points to the value of Baker now, but just as significantly, the leverage that these assets offer Lunnon Metals at nickel prices just 20% higher than the prevailing spot price,” he said.