16th Aug 2006 15:33
Albidon Limited16 August 2006 Level 1, 62 Colin StreetALBIDON LIMITED West Perth 6009 Western Australia ARBN 107 288 755 Tel: +61.8.9389 6300 Fax: +61.8.9389 6400 Email: [email protected] ASX Code: ALB AIM Code: ALD via electronic lodgement Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/7510h_-2006-8-16.pdf Positive Bankable Feasibility Study for Enterprise Nickel Deposit at Munali Project, Zambia HIGHLIGHTS • The Bankable Feasibility Study for the Enterprise Nickel Deposit is complete and indicates positive economics for the project. • Development of a 900,000 tpa underground mine and concentrator based on the Enterprise Deposit is technically and commercially feasible. • Initial 10 year mine life at Enterprise, producing up to 9,000 tpa of contained nickel with potential for further increases in project life through exploration success. • Highly competitive cost structure due to the efficient and low cost mining methods, excellent existing infrastructure and a simple metallurgical flowsheet. • Direct cash operating costs estimated at $US 2.0 per pound of Ni in concentrate, before by-product credits, smelting and refining charges. • The project will be low on the cost curve of nickel producers and is regarded as robust. • Conversion of Enterprise Indicated Resource to Probable Ore Reserve is close to 100%. • Product offtake negotiations are well advanced and it is anticipated these will be concluded shortly. • It is intended that the project will be funded by a combination of debt and equity financing and the Company is currently reviewing a number of proposals in this regard. • The development of the project has been approved by the Board, subject to receipt of environmental approvals, completion of offtake agreement and project funding arrangements. • Significant exploration upside exists at Munali, with regional nickel prospects showing potential for further success. Based on the robust economics indicated by the Bankable Feasibility Study ('BFS'), the Company is progressing with the first phase of the ProjectImplementation including commencement of design and engineering of surfaceinfrastructure, completing power supply contracts and start-up of initial siteworks following receipt of environmental approvals. The BFS has advanced rapidly over the past year since approval of a positiveScoping Study in mid 2005. This rate of progress reflects the strong supportfrom the Government of Zambia and the local community, and this cooperation isappreciated by the Company. Project Description The Munali Nickel Project is located 60 kilometres south of Lusaka, the capitalof Zambia (see Diagram 1 in the hyperlink above). The BFS is based solely on the Enterprise Deposit which is located at thesoutheast corner of the Munali Intrusion (see Diagram 2 in the hyperlink above).The BFS has not taken into account possible future production from the InferredResource portion of the Enterprise Deposit nor any potential future resources inthe Voyager and North West target zones which are presently being drilled. The Enterprise mine will be an underground operation accessed via a shallow (25mdeep) 'boxcut' excavation leading to a nominal 5.0m x 5.5m decline at a gradientof 1 in 7, providing access to the ore at 22.5m sublevels. The planned mine design utilises highly mechanised up-hole benching andlong-hole open stope mining methods, resulting in efficient ore extraction andlow mining costs. These mining methods allow for mining from the top down whichmaximises early production of ore. The ore will be processed through a conventional flotation concentrator,comprising a simple crushing and grinding circuit, rougher, scavenger andcleaner flotation cells, followed by concentrate and tailings thickeners,producing a high grade nickel, copper, cobalt and PGM concentrate for sale to asmelter. Key Results of the Feasibility Study Mineral Resources (as announced on 31 May 2006) 8.0 million tonnes @ 1.4% Ni and 0.9 g/t PGM containing 109,000t of Ni and223,000 ounces of PGM (at a 0.7% Ni cutoff) of which 6.9Mt @ 1.4% Ni isclassified as Indicated Mineral Resource. Successful drilling in early 2006allowed a conversion from Inferred to Indicated of greater than 100% for theEnterprise deposit. Initial Mining Reserves From the Indicated Resource at Enterprise, of 6.9 million tonnes, a ProbableReserve has been calculated of 6.7 million tonnes at 1.23% Ni, 0.17% Cu, 0.07%Co, 0.53 g/t Pd and 0.23 g/t Pt. The Probable Reserve for the Enterprise Deposit contains over 82,000 tonnes ofNi, 11,700 tonnes of Cu, 4,400 tonnes of Co, 114,400 ounces of Pd and 50,380ounces of Pt. This equates to a rate of 97.2% for conversion of the Indicated Resource toProbable Ore Reserve tonnage, fully diluted. Project Life The current reserve base for Enterprise is sufficient for a 10 year life,including construction. The Enterprise deposit is open down dip and along striketo the north and it is expected that mine life may be extended with furtherexploration. In addition, infill drilling should upgrade the remaining InferredResource to the Indicated category. Production Rate Following a ramp up period in 2008 the project is based on a throughput of900,000 tonnes per annum for the bulk of the mine life. Initially a throughputrate of 750,000 tonnes per annum had been anticipated for the BFS however, asthe Enterprise resource has steadily increased in size during 2005 and 2006 thethroughput rate was increased to match the expanded resource. When the project reaches steady state, annual production will compriseapproximately 8,600 tonnes of Ni, 1,400 tonnes of Cu, more than 400 tonnes of Coand 15,000 ounces of platinum group metals (PGM) in concentrate per annum. Capital Costs The capital costs for the concentrator and infrastructure were compiled by RocheJR. These are summarised as follows: Concentrator US$ 36 MillionSurface Infrastructure, including TSF1, Concentrate Storage US$ 14 MillionMine Infrastructure US$ 5 MillionContingencies US$ 9 MillionMiscellaneous US$ 1 MillionTOTAL US$ 65 Million (1Tailings Storage Facility). Cash Operating Costs Cash operating costs for mining are based on quotes from mining contractors inZambia; for the concentrator on costs calculated by Roche JR; and internalestimates were used for the administration costs. The average costs per tonne ofore are as follows: Mining Operating Costs US$ 22.5 / tonneConcentrator Operating Costs US$ 9.8 / tonneMine Administration US$ 3.2 / tonne The direct cash operating costs for the Project average $US 2.0 per lb of Ni inconcentrate. This cost excludes by-product credits, smelting and refiningcharges (refer to paragraph on "Offtake Negotiations" below). By-product creditsare anticipated to be in excess of $US0.4 per lb of Ni in concentrate. This costprofile indicates Munali will be a low cost producer of nickel. Offtake Negotiations Negotiations are well advanced with several nickel smelting companies toidentify the concentrate offtake arrangement that will be most beneficial toAlbidon. It is anticipated that these discussions will be concluded shortly. Project Funding It is intended that development of the project will be funded by a combinationof debt and equity financing. The Company is currently reviewing a number ofproposals with the objective of identifying the optimal funding mix for theproject. Expressions of interest have been received from a number of resourcebanking groups regarding provision of the debt component of the funding, and ashortlist of potential lenders will be prepared in the coming weeks. Project Implementation The Board of Directors of Albidon has approved the development of the MunaliNickel Project. An initial development programme and budget has been approved toenable site works to commence as soon as formal approval has been received fromthe Environmental Council of Zambia. The indicative schedule for Project Implementation at Enterprise is as follows: • Commence surface earthworks Q4 2006 • Engineering, design and procurement Q3 2006 to Q2 2007 • Supply - equipment and fabrication Q1 2007 to Q1 2008 • Installation: o Process plant Q1 2007 to Q2 2008 o Infrastructure Q4 2006 to Q1 2008 o Commissioning Q2 2008. The Australasian Code for Reporting of Exploration Results, Mineral Resourcesand Ore Reserves (the 'JORC Code') sets out minimum standards, recommendationsand guidelines for Public Reporting in Australasia of Exploration Results,Mineral Resources and Ore Reserves. The information contained in thisannouncement has been presented in accordance with the JORC Code and referencesto "Indicated", "Inferred Resources" and "Probable Reserves" are to those termsas defined in the JORC Code. Information in this report relating to exploration results is based on datacompiled by Mr Mike Dunbar, a full time employee of the Mitchell River Group anda consultant to the Company, who is a member of The Australasian Institute ofMining and Metallurgy. Mr Dunbar has sufficient experience which is relevant tothe style of mineralisation and type of deposit under consideration and to theactivity which he is undertaking to qualify as a Competent Person under the 2004Edition of the Australasian Code for reporting of Exploration Results, MineralResources and Ore Reserves. Mr Dunbar consents to the inclusion of the data inthe form and context in which it appears. Information in this report relating to Mineral Resources or Ore Reserves hasbeen either completed by or reviewed by Mr Paul Payne of Resource EvaluationsLtd. who is a member of The Australasian Institute of Mining and Metallurgy. MrPayne has sufficient experience which is relevant to the style of mineralisationand type of deposit under consideration and to the activity which he isundertaking to qualify as a Competent Person under the 2004 Edition of theAustralasian Code for reporting of Exploration Results, Mineral Resources andOre Reserves. Mr Payne consents to the inclusion of the data in the form andcontext in which it appears. If you have any queries please contact the Company Secretary, Nicholas Day on+61 8 9389 6300 or email [email protected]. Additional information may also be viewed on Albidon's website atwww.albidon.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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