EDMONTON, ALBERTA, July 28, 2011 – Mindoro Resources Ltd (TSXV: MIO; ASX: MDO; Frankfurt: WKN 906167) is pleased to report positive results with significant iron and nickel upgrades from bench and larger scale thermal upgrading tests on laterite samples from the Agata Nickel Project. On the basis of the encouraging test results Mindoro has commenced a scoping study to examine two scales of iron-nickel sinter production, to be completed by September 2011.
The process of sintering and partial reduction involves heating the lateritic material in a furnace in excess of 1000 degrees Celsius (ºC) in the presence of a reductant such as coal. This has the effect of driving off all moisture, including water within the clay minerals, and also reducing oxygen content by reaction with coal. A reduced iron-nickel “sinter” has no moisture, much improved blending properties and importantly, a dramatically reduced shipping cost, which results in added-value over direct shipping of unprocessed lateritic ores.
“We are very pleased with the results of the thermal upgrading testing program. This is a key milestone towards value-adding and enhancing the economics of a potential first stage of production,” said Mindoro’s President and Chief Executive Officer Jon Dugdale. “The completion of a scoping study with a positive economic assessment would precede a feasibility study into Stage 1 production.”
Mindoro is pursuing an integrated two-stage development approach to the Agata Nickel Project. Stage 1 was initially based on direct shipping of ore (DSO) only, as announced in the results of the Preliminary Economic Assessment on March 29, 2011. Thermal upgrading has been identified as having the potential to significantly enhance the economics of Stage 1 and mitigate the current market uncertainty for unprocessed DSO material.
The Agata laterite has a layer at the top of the profile termed the “Ferruginous Laterite” that is iron-rich (Fe) but has lower nickel (Ni) grades (>45% Fe, <0.9% Ni). Recent drilling at Agata South included thicker intersections of this material including in ASL001: 4.7m of 50% Fe, 0.59% Ni and 0.11% Co from surface (see release dated July 6, 2011). Discussions with potential off-takers indicate this material is in demand as a DSO product for the Chinese steel-making market. Mindoro is investigating the potential market for an upgraded iron-nickel sinter based on this near surface material that would otherwise be sub-grade “overburden” for the Stage 2 acid-leach processing operation.
On the basis of these results, Mindoro has commenced a scoping study and preliminary economic analysis for two scales of its thermal upgrading project, one producing 120,000 tonnes of iron-nickel sinter per annum and the second producing 600,000 tonnes of iron-nickel sinter per annum. The scoping study will examine capital and operating costs, supporting infrastructure and marketing the final product.
The scoping study, due for completion by end September 2011, will provide the necessary information upon which the Company can upgrade permitting and progress the Stage 1 iron-nickel sinter project to feasibility.
Stage 2 Pre-Feasibility Study
The Agata Nickel Project Stage 2 pre-feasibility study is progressing well, based on the positive preliminary economic assessment (PEA) released March 29, 2011 that described a 15 year project producing 18,000 tonnes of nickel in intermediate product per annum at low operating costs of US$1.65 per nickel pound (lb), with by-product credits, and a Net Present Value (NPV) at US$10/lb nickel price of US$390 million.
Metallurgical test-work in progress at SGS Minerals’ laboratories in Lakefield, Canada, in progress, has backed up the very high nickel extractions and fast leaching rates of the Agata resources that were achieved in the initial testing (see release December 13 2010). Site locations for processing and residue storage have been selected and engineering studies are in progress. The study is due for completion in October 2011.
Exploration Program for Resource Expansion
The Company has been methodically drilling the Exploration Target area, of some 900 hectares, with the goal to expand upon the existing nickel laterite resource at Agata. Approximately half the area has been drilled and the Company is awaiting final results before finalizing a resource estimate increase that will be almost entirely a measured and indicated resource for open-pit mineral inventory purposes and incorporation into the Stage 2 pre-feasibility study production schedule. A component of the resource estimate will be allocated to the Stage 1 iron-nickel sinter project scoping study schedule.
Indications from initial resource modeling show that the mineralized areas drilled to date are not as thick or as continuous as had been supposed by the original Exploration Target for those areas (see release January 11, 2010). There remain five more exploration target areas to be drilled, namely San Jose, Tapian-MAMATFA, Tapian-Corplex, Villariza and Mat-I. At this point, it appears the magnitude of resource expansion for the areas drilled could be half what the January 2010 Exploration Target estimated for those areas. More data needs to be incorporated before the resources of the Exploration Target areas drilled to date can be fully modeled and estimated; the report is expected in Q3.
Jon Dugdale explained, “While it appears the Exploration Target will not be as big as we first thought, we believe that sufficient additional resources do exist to extend the projected life of the project well beyond the 15 years outlined in the Preliminary Economic Assessment released March 29 and will also provide for the early-stage iron-nickel sinter project scoping study. The Agata project is solidly advancing towards feasibility.”
Technical Details of the Thermal Upgrading Tests
Mindoro commissioned bench-scale test-work to investigate thermal upgrading options for the Agata Nickel laterite. The tests were carried out at SGS laboratories in Perth (SGS) and included sintering and partial reduction with gas, oil or coal as the reductant. The best upgrades, achieved with coal as a reductant, produced significant upgrades in nickel (Ni) and iron (Fe) from limonite samples based on sintering-partial reduction and then magnetic separation. At the sintering-partial reduction stage an upgrade of over 25% (1.25 times) on a dry basis for both nickel and iron was achieved, while the best recoveries were greater than 95% for both nickel and iron. Magnetic separation on the two limonite samples produced a total upgrade of 100% (2 times) and 200% (3 times) for nickel grade and 50-100% for iron grade, also on a dry basis. Recovery of nickel and iron to the magnetic fraction was below target at less than 80%, but may be improved through grinding and different magnet configurations.
The samples provided by Mindoro were analysed at SGS and produced nickel and iron assays for Limonite of 1.40% Ni, 40.7% Fe and Saprolite of 1.38% Ni, 12.2% Fe.
The procedure that produced the greatest upgrade on limonite samples, with coal as the reductant, was as follows:
- Blended ore and coal held at elevated temperature (>1000ºC) for two hours in a non-oxidising atmosphere, followed by cooling and magnetic separation
- Roasting stage: >20% mass decrease, 1.2-1.3 times Ni upgrade, 1.3 times Fe upgrade
- Recovery from roast to magnetic fraction: nickel 70%, iron recovery 47%
- Overall upgrade from feed to magnetic fraction: 2 to 3 times nickel, 1.4 to 1.9 times iron.
A summary of the test results is presented in the table below:
Click here to open a larger view of the above table.
Similar sintering and partial reduction tests were performed by GITS Sintering Tech Corp. (GITS) in Manila, at a test facility established in the Mines and Geosciences Bureau (MGB), Manila (a non-ISO accredited facility). Four 250 kg samples at a range of grades were tested including ferruginous laterite sample #1 that assayed 0.67% Ni, 49.7% Fe. The best nickel-iron upgrades were achieved by sintering and partial reduction with the highest amount of coal at 15%, above 1000ºC and over a 50-minute sintering period (i.e. highest temperature and longest sintering time). The level of upgrade was similar SGS tests at 1.2 to 1.3 times. Initial magnetic separation tests produced a modest upgrade but more test work is required to optimize the magnetic separation process.
The average 1.2 to 1.3 times upgrades on a dry basis achieved in the bench scale tests at SGS and the larger scale tests in Manila (GITS), will be applied to the scoping study for production of a thermally upgraded iron-nickel sinter product.
On behalf of the Board of Directors
Jon Dugdale,
President and CEO