Ivanhoe Australia’s Merlin project is poised to be the nation’s first rhenium mine but will cost more to develop than previously estimated.

The copper and gold producer also on Monday said it would scale back work on its Mount Dore copper project in north west Queensland-focused because studies conducted to date required further analysis.

Shares in Ivanhoe Australia finished down eight cents, or 5.41 per cent, at $1.40.

Ivanhoe has completed a feasibility study for Merlin, also in northwest Queensland, which is expected to cost $345 million to achieve first production compared to a pre-feasibility study estimate of $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 that leads to the underground orebody.

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 200.

It 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.

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