16th Nov 2007 07:00
Albidon Limited16 November 2007 MUNALI NICKEL PROJECT UPDATE http://www.rns-pdf.londonstockexchange.com/rns/8664h_-2007-11-16.pdf KEY POINTS • Project construction is progressing ahead of schedule with commissioning anticipated to commence in Q2 2008, several months ahead of previous schedule. • Manufacture of the main concentrator equipment is complete with all items now in transit to Munali. Ball mills are expected to be delivered in December 2007. • Earthworks for the concentrator are complete with civil engineering and concrete works progressing. • All significant construction contracts for erection of steelwork, electrics and instrumentation, have been awarded. • Following a detailed review of Munali project, costs through to positive cash flow are expected to increase by approximately 24% to USD 124m. A funding plan for additional cost is well advanced. Munali Nickel Project Albidon's 100% owned Munali Nickel Project is located approximately 60kilometres south of Zambia's capital city Lusaka. A positive BankableFeasibility Study was completed in July 2006 and site works commenced inSeptember 2006, following receipt of all required approvals. Project Construction Progress and Schedule The Munali Project is now significantly advanced and is progressing ahead of thepreviously advised schedule. A revised schedule has been prepared following areview of the critical-path items and progress to date on construction of theconcentrator. This updated schedule indicates that first ore into theconcentrator is expected in the middle of the second quarter of 2008, severalmonths in advance of the previously advised schedule. The design, procurement and construction of the concentrator, the critical pathfor cash flow from the project, is approximately 65% complete. The majorcement pours for the primary crusher and ball mill foundations have beencompleted (please see attached hyperlink for Photos 1 to 3). All majorcritical items for the concentrator have been manufactured and have eitherarrived or are in transit to the project site. Earlier his year delivery of the first stage of electrical power from the gridwas completed by ZESCO, the sole power supplier in Zambia. This supply line iscapable of delivering sufficient power for construction and mining. However,cost forecasts for the Project have assumed the second phase of the power supplywill be delivered behind schedule and an allowance for the hire of generatorshas been included in forecasts. Higher than anticipated nickel, copper, cobalt, platinum and palladium priceshave substantially added to the project economics since the Bankable FeasibilityStudy ("BFS") was completed over 16 months ago. Mining Progress The initial excavation of the mine portal and decline tunnel was commencedearlier this year with hand-held equipment, following completion of the box-cut,to expedite development of the mine. Following the mobilisation of undergroundmining contractor, Byrnecut Mining International Limited, mine development isnow fully mechanised. Decline advance rates have accelerated to exceedtargets. Cost Review & Project Funding A comprehensive review of costs, through to positive cash flow, has beenundertaken following award of the final significant construction contracts forsteelwork erection, electrics and instrumentation. This review has indicated anincreased cost estimate of approximately 24% (USD124m) for the Munali project,reflecting a combination of tight construction market conditions and costincreases in materials, equipment and labour. The Company is well advanced tosecuring the funding for any shortfall as a result of these forecast costs. The higher costs for materials, equipment and labour are largely a result ofbuoyant conditions within the resources industry from higher commodity prices.These conditions ultimately add to the project's economics. Key Milestones and Forward Programme The key development milestones achieved for the Munali Project are: • September 2006: • Approval received from Environmental Council of Zambia allowing project construction to commence. • October 2006 • Concentrator design commenced by Roche Engineering. • April 2007 • Orders placed for major concentrator equipment items with long delivery lead times. • June 2007 • Construction Management contract awarded to GRD Minproc. • Plant area cleared and topsoil removed. • July 2007 • Bulk earthworks commenced. • Roche Engineering design work completed. o Roche procurement of major concentrator equipment completed. o Structural steelwork and plate work fabrication commenced. • August 2007 • Civil works commenced. • September 2007 • Twin-boom jumbo, truck and load-haul-dump equipment arrived at site. The key milestones for the project through to first ore into the concentratorare: • November 2007 o Structural, mechanical, plate work and piping erection and installationto commence. • December 2007 o Electrical and instrumentation installation to commence. o Delivery of ball mills to project site. • February 2008 • Additional jumbo, load-haul-dump and additional trucks to arrive at Munali. • March 2008 • First ore production from development areas. • April 2008 • Long-hole mining rig mobilized to site. • Mid Q2 2008 • First ore into concentrator. If you have any queries, please contact the Chief Financial Officer, NicholasDay or Managing Director, Dale Rogers on +61 8 9211 4600 or [email protected]. Additional information may also be viewed on Albidon's website atwww.albidon.com. Albidon's nominated adviser is RFC Corporate Finance Ltd, contact Stephen Allen+61 8 9480 2500. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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