Big reserve upgrade for Nkomati nickel mine in South Africa

Big reserve upgrade for Nkomati nickel mine in South Africa

JSE-listed African Rainbow Minerals (ARM) and LionOre Mining International Limited (TSX, ASX, LSE, BSE), co-owners of the Nkomati nickel mine in South Africa, have announced a 50% increase in the mine’s nickel reserves.

In a joint statement issued on Thursday, the two miners announced that following the completion of pit optimisation studies at Nkomati, the mine’s nickel reserves have been increased from 324,627 Ni tonnes to 485,377 Ni tonnes. Nkomati’s nickel is a sulphide ore which tends to have less in the way of processing problems than lateritic ores, which form the bulk of the world’s nickel reserves. Nkomati is situated in the Mpumalanga province in the northeast of South Africa, some 300 km east of Johannesburg.

The mine is said by the operators to be one of the lowest cash cost nickel mines in the world. The main massive sulphide orebody currently produces 4,500 to 5,000 tonnes of nickel annually, with significant by-products including copper (2,800 tonnes), palladium (22,000 ounces) and platinum (7,000 ounces).

LionOre and Afrivan Rainbow also announced a revised resource statement of 942,254 tonnes of nickel, from the previous statement of 674,735 tonnes of nickel. The by-product reserves also increase significantly to 193,783 tonnes of copper, an increase of 43% and 4,181,015 ounces of Platinum Group Metals (pgm), an increase of 70%.

Nickel, copper, cobalt, chrome and platinum group metal (PGM) mineralisation at Nkomati occur in three distinct ore zones. Closest to surface is the Chromititic Peridotite Mineralised Zone (PCMZ) in the Chromititic Peridotite (PCR) unit. This overlies the Main Mineralized Zone (MMZ), which occurs above the Massive Sulphide Body (MSB), the focus of current mining activities.

For ARM chief executive officer Andre Wilkens, “These results re-affirm the ARM strategy of investing in long life quality assets. The ability to supplement the MMZ production with PCMZ proves the potential of this quality ore body. Adding the chromite to Nkomati’s already significant by-products will continue to make Nkomati most competitive from a global perspective.”

LionOre president and chief executive Colin Steyn added: “The increase in Nkomati’s reserves, combined with the revised resource statement makes this mine a significant nickel sulphide deposit. In line with LionOre’s strategy of integrating brownfield mineral resource potential into sustainable metal production, Nkomati forms an integral part of LionOre’s long-term growth production profile. In addition, the by-product potential of the chromitite within the PCMZ as well as the dramatic increase in PGM’s in both the PCMZ and MMZ now reporting to reserves, is very exciting and will enhance the economics of the Nkomati expansion.”

Previous evaluation studies on a large-scale expansion had resulted in the overlying PCMZ being categorised mainly as uneconomic due to the modifying factors. However, following LionOre’s 50% acquisition, the joint venture partners re-examined the expansion potential and commissioned the pit optimisation studies. The statement added that samples of the PCMZ unit submitted to Mintek in South Africa for metallurgical testing returned results that confirm economic base metal concentrate grades are obtainable at acceptable recovery rates.

“In addition, the test work at Mintek has confirmed that the chromite in the PCR unit can be upgraded to a saleable product. This coupled with improved base metal and by-product price forecasts will enable the bulk mining of a larger portion of the PCMZ and facilitates the application of a lower reserve cut-off grade,” the statement read.

The optimisation study was conducted by Lower Quartile Solutions (Pty) Limited (LQS) using a 0.24% Ni cut-off for the MMZ and a 0.16% Ni cut-off for the PCMZ. “The reduction in cut-off from 0.30% to 0.16% Ni for the open pit PCMZ and from 0.35% to 0.24% Ni for the open pit MMZ has unlocked a significant part of the resource that was previously regarded as uneconomic. The main value added lies in the PCMZ. The optimised open pit reserve for the expansion had not previously included the PCMZ, so the 153,342 tonnes of contained nickel that is now available for extraction, is additional to previously quoted contained nickel units for the deposit. The contained nickel available for extraction in the MMZ has also increased from 228,215 tonnes to 235,623 tonnes,” the statement read.

“On the basis of these positive results, LionOre and ARM have commissioned Hatch Africa (Pty) Limited in Johannesburg to proceed with the bankable feasibility study for a large-scale open pit and underground operation to exploit the MMZ and PCMZ. This study will be completed by the end of June 2007.”


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