ASX
AND MEDIA RELEASE
Monday 21 April
2008
UPDATE - NORNICO
NICKEL PROJECT (QLD)
·
Process Design
Changes Improve Efficiencies
·
Mine Feasibility
Study due end of year
·
Nickel production
target now 7,000 tpa
Metallica Minerals Ltd
(ASX code “MLM”) today announced a change to a section of the proposed
nickel-cobalt recovery component of its flagship NORNICO nickel project
northwest of Townsville to achieve efficiency gains, plus significant savings in
construction and operating costs.
The major change is in the process
flowsheet design to include an Ion Exchange
(IX) resin stage for selective nickel and cobalt recovery methodology
compared to the originally proposed precipitation process, whereby the nickel
and cobalt metal product is obtained from solution using carefully rising ph
control.
Metallica says the decision, prompted by
higher than expected cost estimates for the precipitation plant (the “backend”
aspect of the metal extraction process), will push out the completion of the
current mine feasibility study from mid-year until late this year, to allow for
further process design and backend metallurgical test
work.
A review of
alternative options for the backend flowsheet favours a hybrid of the
conventional precipitation flowsheet to include an IX resin section for clean,
selective and efficient nickel and cobalt metal recovery.
The inclusion of the IX resin route should
lower the capital cost for the greenfields NORNICO heap leach nickel operation,
which is expected to produce, subject to feasibility study (including further
detailed metallurgy), first nickel and cobalt production forecast in late
2010.
It should also achieve a more efficient
process, and lower overall operating costs for what Metallica says will be a
minimum 10-15 year mine life but “probably decades” using the higher grade
portions of NORNICO’s Measured and Indicated Resource (30.5 Mt at 0.74% Ni using
0.45% Ni cut-off, see Table 1
below), to produce either Ni hydroxide or carbonate product. However,
the “front end” (mining and heap leaching) throughput will initially be reduced
to 1 million tonnes per annum (Mtpa) to more adequately match the new backend
flowsheet and this will result in reduced nickel production to around 7,000
(previously planned 10,000) tonnes of nickel per
annum.
“Our primary focus is to make NORNICO as
robust as possible as we believe it will have a very long mine life, and our
optimism is gathered from the fact that NORNICO is in an excellent location, its
ore types have shown to be highly amenable to acid leaching, a major portion of
its nickel deposits comprise dry, free silica rich, iron poor laterite ore types
with good screen upgrade and heap stability characteristics, plus we have a very
competitive process flowsheet,” Metallica’s Managing Director, Mr
Andrew Gillies, said
today.
He said the
original backend precipitation process was chosen more than two years ago and
significant process understanding has been considered in the intervening period.
“The
IX resin process is a
well used metal recovery technology from acidic solutions, particularly for
uranium, copper and base metals, and in hindsight, perhaps we could have gone
down that path in the first place. We also have several patent applications on
heap leach processing, including the new flowsheet now proposed for
NORNICO”
Mr Gillies said indicative acid and power
plant capital costs from suppliers for NORNICO, allowing for the production of
up to 2,000 tonnes per day of acid, had “come in within our expectation range at
around $135 million”.
“This is the single largest capital cost
item of the project and one which we will obviously continue to monitor closely
as we advance the feasibility study towards completion,” he
said.
Metallica is proposing a three-part
operation at NORNICO, comprising an acid and power plant, a front end nickel
laterite heap leaching operation to get the nickel into solution, and then a
backend plant to precipitate iron for removal, and then recover nickel and
cobalt from the leach solutions – now using the preferred IX resin technology –
to produce nickel and cobalt product for sale to nickel
refineries.
No cost estimates for the overall project
have yet been released as they are subject to final feasibility study
recommendations, but Mr Gillies said that on early indications, the change in
backend plant announced today, and other flow-on impacts associated with that
change, should save “tens of millions of dollars” and gain considerable added
efficiencies.
These efficiencies will likely include
lower capital cost, lower acid and lime usage, slightly better nickel and cobalt
recovery, and produce a cleaner (lower contaminant metals) and higher grade
intermediate product which will promote a better price paid from
refineries.
“It is also envisaged there will be a
smaller acid and power plant requirement - of around 1,500 to 1,800 tonnes per
day acid production compared to 2,000 tpd, although it maybe more beneficial to
retain this capacity for potential future capacity scale-up and project
expansion” he said.
Mr Gillies added that due to the escalation
of materials and labour cost environment facing Australian resource and
infrastructure developers, Metallica had also elected to revise slightly upwards, its internal nickel and cobalt average long-term pricing estimates.
These metal prices, for the purpose of feasibility, have now been revised to
US$9/lb Ni (previously US$8/lb) and US$18/lb Co (previously US$16/lb). It should
be noted that there will be cost price pressures for all nickel developers and
producers, plus we expect these prices to be well below Chinese Pig iron nickel
production costs which are estimated around US$11-15/lb Ni. Current global
prices for the commodities are around US$13/lb Ni and US$50/lb Co.”
Metallica and feasibility study manager,
Lycopodium Engineers, will now redefine and readjust NORNICO’s plant
configurations and costings to take into account the IX resin process step
inclusion and “to get the most cost effective flowsheet and plant set-up right
by the end of the feasibility” Mr Gillies said.
Subject to the feasibility study, project
financing is expected to be put in place from early 2009 as well as contracts
let for some of the long-lead items which could take 22-months for delivery.
Metallica recently announced an upgraded
Measured, Indicated and Inferred resource for NORNICO from its combined
Minnamoolka and Bell Creek deposits comprising 35.5 million tonnes grading 0.73%
nickel at a cut-off grade of 0.45% nickel for a contained 259,000 tonnes of
nickel (see Table 1 and ASX Release dated 14
April 2008) – with significant potential to add additional nickel
deposits from adjoining brownfields and greenfields regional
exploration.
For Further
Information
Andrew
Gillies
Kevin Skinner
Managing Director, Metallica
Minerals
Ltd
Field Public Relations
Ph: (07) 3891 9611, Mob: 0416 137
556
Ph: (08) 8234 9555, Mob: 0414 822 631
Andrew
Gillies
Managing Director
Metallica Minerals Ltd
1 Potts
Street
East
Brisbane QLD
4169
GPO Box 122, Brisbane QLD
4001
T + 61 7 3891
9611
F + 61 7 3891
9199
M 0416 137 556 (International +61
416 137 556)
www.metallicaminerals.com.au