Backed by prominent investor Tim Goyder, Chalice Mining has unveiled a significantly cheaper development plan for its flagship Gonneville deposit near Toodyay, though a crucial funding partnership with a Japanese giant remains up in the air.
A Leaner, More Fundable Project
The long-awaited pre-feasibility study, released on Monday, outlines a revised strategy that halves the initial capital cost from a previously estimated $1.6 billion in 2023 down to $820 million. This substantial reduction is achieved through a smaller-scale, phased approach to building the mine.
Chalice's managing director and chief executive, Alex Dorsch, told the market the new study proves Gonneville is now a "fundable and executable project." He emphasised the plan would generate solid returns even at low points in the commodity cycle.
Despite the positive news on costs, Chalice shares fell sharply by 9.4 per cent to $1.58 in early trading as investors absorbed the details.
Production Promise and a Partnership Question
The proposed mine represents a first for Australia, aiming to produce a group of metals known as 3E precious metals: palladium, platinum, and gold. Initial annual output is targeted at 220,000 ounces of these combined metals.
Gonneville would also be a significant source of critical minerals, delivering 7,000 tonnes per year of nickel and 8,000 tonnes per year of copper.
However, a major uncertainty hangs over the project's next phase. In July 2024, Chalice signed a non-binding memorandum of understanding with Japanese industrial conglomerate Mitsubishi Corporation. The agreement was to work towards a binding partnership or joint venture to develop Gonneville, but only after this pre-feasibility study was completed.
The newly released study now triggers that next step, but Mitsubishi's firm commitment is not yet secured. "We would like to thank Mitsubishi for their support and input to date, and we look forward to working closely with them as we progress into offtake and financing discussions," Mr Dorsch said in a statement.
The Path to Financing and Government Backing
With the study in hand, Chalice's immediate focus turns to securing the capital needed to advance the project. The company has indicated it will pursue debt funding and seek to attract other financing partners.
The explorer is also positioning the project to capitalise on increased government focus on building domestic supplies of critical minerals. Gonneville has already received "strategic project" status from the WA State Government and "major project" status from the Federal Government, which it hopes will aid the funding mission.
"The study demonstrates that Gonneville is viable and will generate solid returns, even at bottom of the cycle prices," Mr Dorsch asserted. The company believes the project's scale, long mine life, and location make it a unique and strategic opportunity in the Australian resources sector.
