The company is closing in on a POSCO decision on the revised budget for Gunson's Coburn Zircon Project in Western Australia, with final negotiations on the Coburn Joint Venture financing Agreement to be completed in March.
The one commercial condition remaining was the final resolution of the project operating budget, and Gunson believes that the results of the optimisation study released in late February will meet the POSCO SPV condition.
The optimisation study showed that by expanding annual ore production by 34% and finished product output by 22%, unit costs have been reduced by an average of 14%.
Financial returns, compared with those released in September 2012 and using the same underlying assumptions, show an increase in the NPV of 56% to $330 million and the IRR of 39% to 31.2%.
The POSCO SPV can earn into Coburn by funding $28 million and then its 40% share of CAPEX.
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