Shares in Clean TeQ Holdings Limited (ASX: CLQ) crashed 12% lower to $0.94 on Monday, after the company released the results of the definitive feasibility study (DFS) for its Sunrise project.
Located in New South Wales, Sunrise is expected to become one of the biggest cobalt mines in the world and a relevant producer of high-grade nickel. Both these minerals are used in the production of lithium-ion batteries for electric vehicles. Sunrise has enough reserves to remain active for over 40 years.
After changing the project to allow for increased production capacity, the company expects capital costs of $1.8 billion, double the amount forecasted by a preliminary study released in 2016.
Based on estimates of the first 25 years of production, the company now attributes a net present value of $1.9 billion to the asset, compared to $1.2 billion in the previous forecast, with a post-tax internal rate of return of 19% instead of 25%. The valuations rely on long-term assumptions on commodity prices.
Another element that may have put off investors is the lack of substantial progress on signing new offtake agreements after the last update provided by Clean TeQ early in May, with a final investment decision from the board targeted for early 2019.