Perth, Feb 5, 2008 AEST (ABN Newswire) - Emerging nickel producer Nickelore Ltd (ASX: NIO) has today announced a Scoping Study update for the Canegrass Nickel Cobalt project. Nickelore commenced the Heap Leach Scoping Study in October 2007 with the appointment of Bruce Wedderburn as Feasibility Study Manager and Perth based engineering company BatteryLimits Pty Ltd as lead Scoping Study engineer.
Engineering Scoping Study
The engineering study is on track for completion by the end of March 2008, with key highlights as follows:
- After consideration of a number of options, the scope of work is now focussed on a 50,000 tonne demonstration heap which is scheduled for commissioning in early 2009 and a commercial heap leach operation which is scheduled for commissioning in 2011.
- The commercial plant is being designed to produce around 20,000 tonnes per annum of nickel over the life of mine.
- The nickel and cobalt produced from the commercial plant would be contained in a mixed hydroxide intermediate product, suitable for sale.
- Further resource evaluation is planned for this year with the aim of identifying additional ore reserves and potential mine sites in adjoining areas, with the objective of providing sufficient reserves for the project.
- Preliminary mine planning for the initial years of operation has been completed.
- Options for the engineering and supply of a 4,400 tonne per day sulphuric acid plant are progressing.
- Potential sources of suitable quality water, which is critical for the project, have been identified.
- Key reagents, such as sulphur, sulphuric acid, magnesia, limestone and calcrete have been quantified and pricing and supply is currently being confirmed.
- Site geotechnical studies plus heap pad design are being undertaken by Golder Associates Pty Ltd.
- Hydrogeological studies are being undertaken by Aquaterra Consulting Pty Ltd.
- Environmental studies and preliminary assessments are being undertaken by Outback Ecology Services.
- Logistic and freight handling studies are being undertaken by Australian Railroad Group (ARG).
Heap Leach Testwork
Laboratory testwork is being undertaken at SGS Lakefield Oretest and at AMMTEC in Perth, Western Australia. The initial testwork which included ore body classification, mineralogy, acid bottlerolls, screen upgrading, atmospheric leaching, agglomeration and percolation tests is largely completed and the focus of the testwork has progressed to four- metre column leaching.
The heap leach testwork is tracking well, with key highlights as follows:
- The bottleroll testwork for the bulk (80%) of the ore has achieved 81% nickel extraction after 90 days.
- The cobalt extraction was over 90% over the same time period.
- Agglomeration and percolation testwork has been very successful under a range of pre-treatment steps, which indicates that high percolation rates can be achieved under heap leaching conditions.
- Four-metre column testwork is underway on seven ore types with good acid percolation rates being achieved.
Alternative Processing Options
In parallel to the development of the heap leaching process, three alternative proprietary processing routes are being investigated.
This work is being undertaken by the technology vendors and involves some emerging technologies for the treatment of nickel laterite ores. These investigations which are based on samples of Canegrass ore supplied to each of the vendors will be completed by end March 2008. In addition to the above testwork, preliminary testwork is being undertaken on atmospheric leaching of the Canegrass ore, to enable a comparison to be made between heap leaching and atmospheric leaching.
Comments
Managing Director Iggy Tan said today that the Company was very pleased with progress of the scoping study and testwork results achieved to date.
"The initial capital cost estimates of between A$600-A$700 million are in line with what we are expecting.
"The preliminary conceptual financial modelling on the heap leach plant shows a robust project at a long term nickel price of US$18,600* /tonne (current price US$27,500/t) generating in excess of A$100 million net cash per annum (before tax). At a nickel price of US$22,000 /tonne, net cash for the project is in excess of A$180 million per annum (before tax).**
"It should be noted that these are preliminary conceptual numbers at this stage, and based on a forecast outlook for nickel and sulphur prices. The final project fundamentals will be published at the end of March 2008 when the Scoping Study is expected to be finalised," he said.
"If results continue to be positive, the company plans to move into the pre-feasibility phase and commit to the demonstration plant. "We expect to place orders for long lead items for the demonstration plant in early Q2 2008 and for construction to occur during Q4 2008 with the demonstration plant fully operational in early 2009.
"We have access to enough water from our own tenements, ore from the Patch-Gulch pit and infrastructure in progress to establish a demonstration plant quickly"
"At this stage, the bankable feasibility study for the commercial plant is expected to be completed in mid 2009. "Assuming a 24-month construction period, the commercial heap leach plant could be operational in 2011".
Mr Tan said a recently announced decision by Heron Resources to defer a heap leach project did not have any technical or practical implications for Nickelore.
"Different nickel laterite ore behaves differently under heap leach conditions", he said.
The economics of heap leach production are driven by acid consumption, recovery, grade, agglomeration, percolation, consumable prices, size of the plant and capital cost. The project fundamentals relate mostly to ore body characteristics, particularly acid consumption.
"The Canegrass ore is predominantly a siliceous type ore (containing 50-75% silica) with less clay and iron content than some other ores in the region. This silica component consumes little acid contributing to significant savings on acid consumption." "Acid consumption is the key economic driver of the project, representing approximately 35% of production and consumable costs. Subsequent neutralisation represents an additional 40%. This means that around 75% of the total production and consumable costs are related to ore acid consumption."
"Given the excellent results of early test work and acid consumption characteristics on Canegrass ore, we are confident of establishing a successful project and we intend to continue our scoping and feasibility study program," said Mr Tan.
Notes:
* IBIS World Forecast
** The above evaluations are preliminary in nature and remain subject to completion of the scoping study and subsequent feasibility study. The numbers shown may not reflect
actual performance.
Contact
Iggy Tan
Managing Director
TEL: +61-8-9481-2433
email: iggy@nickelore.com.au
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