Johannesburg,
26 September 2007
African Rainbow Minerals Limited (ARM) and Norilsk
Nickel, 50:50 JV owners of the Nkomati Nickel Mine in the Mpumalanga
Province in South Africa, are pleased to announce the approval of a R3.2
billion ($445 million) Phase 2 Large Scale Mining Expansion to increase
average annual nickel production to 20,500 tonnes from 5,500 tonnes and
extend the life of mine by 18 years to 2027.
Peter Breese, Chief Executive of Norilsk Nickel
International commented: “Approval of the Phase 2 Expansion cements
Nkomati’s long term future as it unlocks around 1 million tonnes of
contained nickel resource and quadruples annual nickel production to 20,500
tonnes. Norilsk Nickel is planning to invest R6 billion (+/-$830
million) in Africa over the next three
years to double nickel production and implement the innovative Activox�
technology.
The expansion also delivers a powerful boost to the
regional Mpumalanga
economy through this large direct investment and the creation of new
employment opportunities. The recent successful delivery of the
Interim Plan on time, within budget and with zero lost time injuries by
Nkomati project team bodes well for this project.”
ARM Chief Executive Officer, Andr� Wilkens
said: “The Phase 2 Large Scale Mining Expansion takes ARM to the next
level of becoming a larger producer of nickel, in line with our 2 x 2010
strategy, and at an operational cost which is globally competitive.”
The Phase 2 Large Scale Mining
Expansion
The Phase 2 Large Scale Mining Expansion will exploit
two zones of the large layered polymetallic disseminated sulphide resource,
which contains 904,335 tonnes of nickel. The first is the Main
Mineralised Zone (MMZ) which is currently being mined by the Interim Phase
through underground and open pit mining. This is overlayed by the
Peridotite Chromititic Mineralised Zone (PCMZ) which will be mined by open
pit mining. In addition to nickel, by-products of PGMs, chromite,
copper and cobalt will also be recovered.
Mining will continue from the underground mine, at the
rate of 47,000 tonnes per month (tpm), and the development of two new
open-pits, Pits 2 and 3, which will produce 578,000tpm of ore at a steady
state of production. The average mill grade for the total project
will be in the order of 0,4% nickel, over the life of mine.
Nkomati expansion phases (all on a 100%
basis)
|
|
Phase 1 (Interim) Completed
|
Phase 2
(Large Scale)
Released for construction
|
Total Nkomati at steady state
|
|
|
|
A
|
B
|
|
|
Plant capacity (tpm)
|
MMZ: 100,000
|
MMZ: 375,000
|
PCMZ: 250,000
|
Total: 625,000
|
|
|
MMZ underground
MMZ openpit
|
MMZ underground
MMZ openpit
|
PCMZ openpit
|
MMZ/PCMZ combined
|
|
Nickel production (tpa)
|
c. 5,500
|
c. 15,000
|
c. 5,500
|
c.20,500
|
The current 100,000tpm concentrator will be upgraded to
250,000tpm to process the PCMZ ore and a new 375,000tpm concentrator for
the MMZ will be constructed to give an overall concentrator capacity of
625,000tpm. The mine’s related infrastructure will also be
upgraded, including construction of two new tailing facilities and an
upgrade of the power supply to 80MVA.
Construction will commence in early 2008 and is scheduled to take 24 months
from announcement date. Production will be sequenced, targeting initial
production ramp up from the MMZ concentrator during the third quarter of
2009, with full production by first quarter 2010, and then initial PCMZ
production ramp up targeted during the third quarter of 2010, with full
production by 2011.
Average annual nickel production in concentrate is forecast to be 20,500
tonnes over the 18 year life of mine. By-product production is
expected to be 9,000 tpa copper and 110,000 ounces per annum PGMs,
predominantly palladium.
The expansion secures 254 jobs and creates an additional 330 new jobs and
during construction will employ some 2 000 contractors.
Project Economics
The project assessment was based on a capital cost of R3.2 billion ($445
million) in May 2007 terms and an average nickel cash cost forecast of
$3.57/lb. This will result in an after-tax real IRR greater than 20%.
The project will be funded from Nkomati internal cash flows and by both
partners when required. The release of the project triggers the $20 million
payment by Norilsk Nickel (previously LionOre) to ARM in accordance with
the original transaction.
Refining
Nkomati has already secured toll smelting and refining capacity for its
concentrate. A Bankable Feasibility Study (“BFS”) will be
carried out during 2008 to examine the viability of constructing an
Activox� refinery for Nkomati.
Nkomati
Resource
The above underground
mineral resources were estimated during 2006 by Mark Davidson,
Manager - Technical Services for Nkomati Mine. All open pit resources
have been estimated by Jonathan
Woolfe, Geology Leader –
ARMplatinum. Messrs Vieler, Davidson and Woolfe have sufficient experience
which is relevant to the style of mineralization and type of deposit under
consideration and to the activity which they are undertaking to each
qualify as Competent Persons as defined in the 2004 Edition of SAMREC
(South African Code for Reporting of Mineral Resources and Mineral
Reserves); JORC “Australasian Code for Reporting of Exploration
Results, Mineral Resource and Ore Reserves” and as Qualified Persons
as defined in the Canadian National Instrument 43-101 (Standards of
Disclosure for Mineral Projects).
The Measured
and Indicated Mineral Resources are inclusive of those modified to produce
the Mineral Reserves.
ENDS
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