The study was initiated on recommendations contained in the Development Options Study, released on March 15, 2010, completed by Boyd Willis, Hydromet Consulting (BWHC). Recommended is a two-stage development plan. Stage One consists of extracting parcels of high-grade material for an initial Direct Shipping Ore (DSO) operation. Stage Two, BWHC recommended the company establish a hydrometallurgical processing plant to treat the Run Of Mine (ROM) limonite and saprolite ore.
The objective of the Scoping Study is to provide a preliminary assessment of the economics of three identified processing options at �30 - 35% accuracy and identify the other project drivers such as environmental and technology risks. The scoping study includes the investigation of the mining, processing, process services, power generation, infrastructure, and major environmental issues. The study was based on the current Agata mineral resource estimate, including inferred resources. The study did not address certain economic parameters, such as Net Present Values or Internal Rates of Return (IRR). These will be evaluated in an advanced economic assessment that includes the DSO Stage of the project, currently underway.
The preliminary characterization of the ore types and their amenability to acid leaching, as described in the Development Study identified the following suitable processing routes, evaluated in this study:
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Base Case � a major integrated High Pressure Acid Leaching (HPAL) / Atmospheric Leaching (AL)/Saprolite Neutralisation (SN) process based in scale on the highly successful Sumitomo/Nickel Asia Coral Bay Nickel project, on Palawan Island, the Philippines. 27,400 tonnes per annum of nickel as Ni-cathode product would be produced, estimating an average cash-cost of production (after year three) at US$2.47 per pound of nickel or US$1.59 per pound of nickel with cobalt credit (assuming cobalt price of US$18/lb and 80% payable for cobalt contained in cobalt sulphide). The Capital Cost estimate for this processing option, includes electrowinning and acid production plant, is US$1.33Bn, a direct cost of US$837 million, indirect infrastructure costs of US$182 million and a 30% contingency.
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Larger Production Case - a scale-up of the base case which employs the maximum HPAL autoclave available. The nickel production for this option is increased to 42,000 tonnes per annum nickel as Ni-cathode. The estimated average cash-cost of production (after year three) is US$2.22 per pound of nickel or US$1.35 per pound of nickel with cobalt credit (assuming cobalt price of US$18/lb and 80% payable for cobalt contained in cobalt sulphide). The Capital Cost estimate for this processing option, includes electrowinning and acid production plant, is US$1.74Bn, a direct cost of US$1.1 Bn, indirect infrastructure costs of US$243 million and a 30% contingency.
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Atmospheric Leach Case � Atmospheric Leaching of Saprolite only, without the use of autoclaves. The nickel will be recovered by hydroxide precipitation producing an intermediate Mixed Hydroxide Precipitate (MHP) product. The design capacity for this option is 14,300 tonnes per annum nickel contained in MHP. The estimated average cash-cost of production (after year three) is US$3.25 per pound of nickel or US$2.94 per pound of nickel with cobalt credit (assuming cobalt price of US$18/lb and 80% payable for cobalt contained in cobalt sulphide). The Capital Cost estimate for this processing option, includes acid production plant, is US$740 million, a direct cost of US$479 million, indirect infrastructure costs of US$91 million and a 30% contingency.
Capital cost estimates did not include owner�s costs, mining related capital costs, duties and taxes for equipment, technology fees/project support, EPCM assistance following introduction of feed to the plant, or an estimate of working capital. Operating cost estimates did not include sustaining capital costs, government charges, royalties, marketing costs, corporate consultancies or duties, customs or other imposts.
The scoping study is based on the current Agata mineral resource estimate disclosed on September 8, 2010. For the purposes of the scoping study, relatively aggressive cut-off grades were applied to the resource to approximate plant-feed for the base case project sufficient for a production rate of >2.5 million tonnes treated per annum for six years. The Company is currently drilling the regional Exploration Target to further evaluate the potential of supplying sufficient total tonnes to the base case project for 20 years or more of similar production. The cut-off grades applied were Limonite: 0.85% Ni, Transition: 0.90% Ni and Saprolite: 1.0% Ni cut off. Additionally an upper cut-off of 1.35% Ni was applied to all three ore types to classify the high grade material for potential direct shipped ore operations, excluding 4.86 million additional tonnes of high-grade material. The estimated plant feed inventory derived from the current Agata resource, including the DSO component, is as follows:
|
|
M Tonnes |
Nickel % |
Cobalt % |
Iron % |
Al % |
Mg % |
SiO2% |
|
Limonite |
7.51 |
1.05 |
0.112 |
43.7 |
2.85 |
2.12 |
8.59 |
|
Saprolite |
8.88 |
1.15 |
0.024 |
10.8 |
0.46 |
16.9 |
40.5 |
|
Sub-total |
16.39 |
1.10 |
0.065 |
25.9 |
1.56 |
10.1 |
25.9 |
|
High Grade DSO |
4.86 |
1.59 |
0.044 |
16.0 |
0.73 |
14.4 |
35.8 |
|
Total |
21.25 |
1.21 |
0.060 |
23.6 |
1.37 |
11.1 |
28.2 |
As disclosed in the Company�s, January 11, 2010, press release, the potential quantity and grade of the Exploration Target is conceptual in nature; there has been insufficient exploration to define a mineral resource and it's uncertain if further exploration will result in the target being delineated as a mineral resource. There is no guarantee that these resources, if delineated, will be economic or sufficient to support a commercial mining operation.
The preliminary assessment is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them enabling them to be categorized as mineral reserves. (it is uncertain the preliminary assessment will be realized.)
Previous metallurgical testing on the Agata mineral resource was completed by Enlin Steel Corporation (Enlin) in 2008. Enlin is a major stainless steel producer in the Asian region. The bench scale testwork program was conducted on six samples and included atmospheric leaching and HPAL. This work was reviewed by BWHC. Limonite HPAL gave results of >95% recovery for both nickel and cobalt with average acid consumption of 314 kg/t. Saprolite atmospheric leach gave results of 90% nickel recovery with 900kg/t acid.
The Enlin testing was performed in a private, non-accredited lab; the equipment and procedures employed for HPAL testing were not disclosed to the Company. However, the results are considered comparable to other Philippines laterite test results and thus provide some confidence in the methods applied. Readers are cautioned that the sample size was limited and may not be representative of the deposit. For the purposes of the scoping study, BWHC applied more conservative assumed recoveries for each of the identified processes based on projects of similar size and scope in the Philippines and elsewhere. A more comprehensive bench scale testing program by SGS Lakefield Oretest, a NATA accredited laboratory in Perth, is due to be finalized and reported in October 2010.
The study concludes that the potential to establish a low-operating cost nickel operation is subject to satisfying certain key technical factors, including the conversion of the regional Exploration Target to sufficient mineral resources to support an economic project life. Currently, identified resources will support a mine life of six years and are not considered sufficient to warrant commencement of production, based on the base case integrated High Pressure Acid Leaching (HPAL) / Atmospheric Leaching (AL) / Saprolite Neutralisation project processing 2.75 million tonnes per annum. However, integrated processing options including DSO and the Atmospheric Leach case will be advanced to provide an economic assessment for the opportunity to develop an integrated and staged project based on the current Agata Resource.
The Agata Nickel Project Scoping Study was coordinated by Boyd Willis, MAusIMM, of Boyd Willis Hydromet Consulting (BWHC), an independent qualified person as defined by NI 43-101, in conjunction with Ausenco-Vector in Brisbane, Australia. Boyd Willis, has verified and authorized the technical information detailed in this release. Boyd Willis, has 29 years of experience, as a professional process engineer, including technical positions at Kwinana Nickel Refinery, in Western Australia; the QNI nickel laterite project in North Queensland, and other nickel laterite projects around the world. The NI 43-101 compliant technical report will be filed on SEDAR within 45 days.
Mining will be carried out by industry standard open-cut methods that are commonly applied in the Philippines and elsewhere. Mining will be relatively selective on two to three meter high benches and will involve a range of grade control and stockpiling strategies. Mining costs in this study have been assumed based on information from comparable local operations, adjusted for differences in haulage distance and scale of operation.