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Cassini Resources Ltd's Nebo-Babel is a premium undeveloped nickel asset

Cassini Resources Ltd (ASX:CZI) has lowered costs and increased value through its project optimisation work on the Nebo-Babel nickel-copper deposits in Western Australia.

The low cost profile is driven by significant by-product credits, predominantly copper, as well as the low cost of mining, due to the open pit mining method.

In addition, low processing costs can be expected due to the conventional processing method carried out at a large scale of 4mtpa.

The project optimisation work focused on benchmarking C1 cost estimates against global nickel producers.

Project economics estimate production in 2021 and place Nebo-Babel in the 26th percentile with regard to global nickel producers.

The C1 cost is estimated at US$3.40 per pound (on a payable nickel basis), comfortably below the current spot price which is trading at 13-year lows in a range of US$3.75 per pound to US$4.00 per pound.

Richard Bevan, managing director, commented:

"We believe Nebo-Babel is Australia's premier undeveloped nickel sulphide asset.

"Whilst we are now at the low point of the commodity price cycle, the position of the project on the global cash cost curve means it will be one of the first projects to gain momentum as pricing improves.

"There are some very meaningful benefits from Nebo-Babel's combination of a low operating cost profile and long mine life.

"We have a project that displays all the key attributes you'd look for in a future resource project, with the added benefit of being able to implement it in a staged manner to reduce operational risk and the pre-production capital required.

"The cost-effective work we are doing now will position the company well as base metal sentiment improves."

Optimisation study enhancements

Cassini has focused on a number of project enhancements since its April, 2015 scoping study, which was done under a 4 million tonnes per annum development scenario.

Highlights were a 24% reduction in pre-production capital expenditure and a 30% reduction in power costs through the adoption of a hybrid wind-diesel power solution.

Further improvements are expected as the company continues to optimise the project during the pre-feasibility study.

The company maintains a strategic preference for a staged scenario anticipating an initial highgrade 1 million tonnes per annum processing capacity mine, ramping up to a 4 million tonnes per annum operation after 4-5 years.

The company has identified three priority exploration target zones; extensions of Nebo massive sulphide to the north west, extensions to the Startmeup Shoot at Babel and the roll-over zone at Babel.

A drill program is being finalised to test these targets later in 2016 and will provide further information to the market when planning is complete.

The Succoth deposit, 13 kilometres from Nebo-Babel is yet to be considered in project optimisation work and has the potential to extend the project life beyond 30 years.

Exploration portfolio

With the development of the Nebo-Babel project being a long term play, Cassini has defined 4 key prospects at its X17 exploration project - Enceladus, Iapetus, Rhea and Mimas.

The X17 project area has proven base metal prospectively, with large geochemical zinc-lead targets and weathered mineralisation at surface.

The Enceladus and Iapetus prospects are the first target areas to be drill-tested in the program, with heritage clearance completed and drill approvals anticipated in late April to allow drilling to commence.

This geochem program will run concurrently with planned drilling.

Analysis

Nebo-Babel is one of Australia's premier undeveloped nickel sulphide assets.

Being at the low point of the commodity price cycle, the position of the project on the global cash cost curve means it will be one of the first projects to gain momentum as pricing improves.

Cassini continues to attract broker attention with Hartley's recently maintaining their Spec Buy rating and price target of $0.12.

With the stock last trading at $0.04, we would expect the key future drivers of the stock to be exploration results at X17, an increase in the nickel price and further project optimisation results.

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