The company is doing the first pilot run through its demonstration plant in Perth this month and expects to ship bulk samples – from its large-scale Sconi and Flemington scandium-nickel-cobalt projects – to potential customers and off-take partners in November.

Australian Mines has just taken full ownership of Sconi in Queensland, in a deal worth A$10 million that requires an upfront payment of $3.5 million in 90 days.

Managing director Benjamin Bell said it was an exciting development for the company, which already has a bankable feasibility study underway on Sconi.

“We’re a near-term mining company, developing two cobalt-nickel projects in eastern Australia and we’re moving beyond the exploration phase and into development,” Bell said.

“We’re producing a product for the battery market at the end of the year and looking at full-scale production within 18 months from that.”

The shift will mark a return to production for the experienced company, that owned and operated the Blair nickel mine in Western Australia until 2009.

Australian Mines was previously earning up to 75% of Sconi from Metallica Minerals (AU:MLM) and will gain the remainder via a share issue on completion of the BFS and a one-off $5 million royalty payment.

Bell said the company’s investment in a demonstration plant in Perth was an important point of difference from other battery ingredient hopefuls.

“We’ll be able to demonstrate we can produce final product from our ore and from our own plant so we are de-risking it from an investment point of view,” he said.

In a case of symmetrical timing, the company acquired stakes in both Sconi and Flemington on the same day in October last year from different vendors.

It is in the process of acquiring 100% of Flemington in New South Wales from Jervois Mining (AU:JRV) for a total of $6 million in staged payments.

Flemington adjoins Clean TeQ Holdings’ Syerston cobalt-nickel-scandium project and Australian Mines describes it as the same mineralised system divided by a tenement boundary.

The Robert Friedland co-chaired Clean TeQ recently signed a binding five-year off-take agreement for 20% of its cobalt and nickel sulphate production.

Flemington has a 3.14 million tonne resource at 434g/t scandium and Australian Mines is weeks away from updating it and including a maiden cobalt resource.

Drilling last month pointed to the project’s further potential, doubling the cobalt mineralisation footprint and trebling the known footprint of scandium mineralisation.

The project is in the feasibility study stage after the scoping study earlier this year outlined a mine life of up to 45 years, a net present value $255 milllion (using an 8% discount rate), a modest capital cost of $74 million to build a processing plant and an after-tax cash flow of $677 million over the first 18 years.

Meanwhile, Australian Mines is expanded its holding around Sconi 10-fold by applying for five new exploration licences, which Bell said further future-proofed the existing project which already has mining and environmental permits.

Sconi hosts a 12 million tonne resource at 162ppm scandium for 2,989 tonnes of scandium oxide; and an 89 million tonne resource containing 514,000t of nickel and 54,000t of cobalt.

The pre-feasibility study on its scandium deposit estimated an average EBITDA of $59 million a year on producing 50t of scandium oxide annually over a 20-year mine life.

Despite Sconi and Flemington’s separate locations, Bell said the projects offered many synergies.

“They’re virtually identical in terms of ore,” he said.

“We’re treating both through our demonstration plant and test runs show there’s not that much difference between them metallurgically.

“We expect some of what we learn on the BFS at Sconi can transfer across to the PFS on Flemington so there’s a lot of cost savings we can do given they are similar ore bodies.”

The projects’ mix of products means the company can capitalise on both the inside and outside of the growing electric vehicle market.

Nickel and cobalt demand for batteries is predicted to increase with the shift by car manufacturers towards electric vehicles, while scandium-reinforced aluminium alloys are being increasingly used in car frames and panels thanks to their strength and lightweight nature.

Bell said he had also held talks with a car manufacturer in China about using a scandium alloy in the battery housing for electric vehicles.

In the course of processing, Bell said scandium was taken out before the cobalt and nickel so “it doesn’t cost us anything to make it” and the company would rather seek a market than send it to a tailings dam.

The processing has been boosted by the recent appointment of experienced plant builder Tim Maclean as chief operating officer.

Maclean oversaw Vale’s build-from-scratch US$3 billion Mineracao Onca Puma nickel laterite processing plant in Brazil and Bell said his experience was proving invaluable in the construction and operation of the pressure acid lead and solvent extraction demonstration plant in Perth.

The company is planning to run the trial plant continuously to better understand the parameters and tighten up numbers for Sconi’s BFS which Bell said was on track to be delivered in April.

He said the project was expected to cost in order of $400 million and he was holding talks with potential off-take partners regarding partial financing for the project without the need to dilute shareholders.

He was confident of raising the money required to complete the acquisition of Sconi having held positive talks with institutional investors, saying he expected the company’s cash position to remain robust.

The company is fully funded through to its development decision next year, after starting July with $4.6 million and recently being awarded more than A$328,000 under a government tax rebate scheme for research and development work in the previous financial year.

Come decision time in April, Australian Mines will have the happy dilemma as to which project takes priority.

“Our objective is to complete the Flemington PFS and Sconi BFS and when we reach the decision point, we’ll work out commercially which one we develop,” Bell said.

The company has other projects waiting in the wings, including more cobalt potential at its recently acquired Thackaringa tenements, either side of Cobalt Blue’s project of the same name in NSW.

The share price has been on the rise as the company makes rapid progress towards development, up more than 100% over the past 12 months.

“It’s a good space to be in, there’s been a significant change in the appetite for commodities and it doesn’t hurt when a lot of car manufacturers announce their electric vehicle plans,” Bell said.

“We’re as close to production as anyone else in this space and we’re in a sector that’s growing, so that’s probably helped in growing our share price.”