Following a completed feasibility study, Ivanhoe Australia announced that it expects that it will cost $345 million to bring its Merlin molybdenum and rhenium project into production, slightly more than previous estimates.

The Queensland-focused copper and gold producer said its pre-feasibility study estimate was $337 million.

Ivanhoe Australia said an additional $52 million would be spent on a molybdenum trioxide purification plant to produce a higher-grade product that would attract a premium price, increasing the project’s overall returns.

The company is mid-way through construction of a decline leading to the underground orebody, which is in north west Queensland.

Rhenium has one of the highest melting points of all elements and is used mainly by turbine and engine manufacturers, while molybdenum is used in alloy steels.

Merlin was touted as being the world’s highest-grade molybdenum and rhenium deposit when it was discovered by Ivanhoe Australia in late 2008, and is expected to have a mine life of 15 years.

Chief executive Peter Reeve said the production of rhenium from Merlin would be a first for Australia.

Ivanhoe Australia is seeking joint venture partners to help fund development of its projects in the Cloncurry region of north west Queensland, including Merlin.

The company also on Monday said it would scale back work on its Mount Dore copper project in Queensland because studies conducted to date required further analysis.

Ivanhoe Australia last month re-started production at the Osborne copper and gold mine in Queensland, which it acquired from Canada’s Barrick Gold Corp.