Nkomati Chrome Mine Gets Go-Aheadadmin
African Rainbow Minerals [JSE:ARIM] and LionOre Mining International [TSX:LIM], partners in the Nkomati nickel mine in Mpumalanga, have given the go-ahead to a R15.5 million ($2.17 million) chrome ore mine and processor as a secondary project at Nkomati, they said yesterday.
The chrome orebody overlies the nickel resource that is the focus of the partners’ main expansion plans.
A feasibility study into a $310 million expansion of the current nickel mine is under way and should be completed next year. This is expected to increase production to between 16500 and 20000 tons of nickel a year until 2023, from the current 5500 tons.
Last year the Nkomati nickel mine produced about 300000 tons of lumpy and chip chrome ore as a by-product and it was successfully processed into charge chrome at the nearby Assmang Machadodorp smelter.
The new chrome mine and processor is expected to produce about 60000 tons of chrome ore a month at extremely low cost.
The projected internal rate of return for the five-year project is about 200% and the costs would be borne by cash flow generated from Nkomati. Full production would be reached in the first quarter of next year. ”The anticipated quick project ramp-up will enable Nkomati to maximise the current demand for superior-grade chrome ore,” LionOre president and CEO Colin Steyn said.
Numis Securities analyst John Meyer said in a note to clients that chromite ore prices had risen to $O.75/lb in the past week from $0.70/lb because of strong demand for steel-related materials.
Nickel peaked at $23,895 a ton last week as inventories were running down and there were production problems at Indonesian refineries. But prices could ease in the third quarter due to seasonally lower demand.