Kambalda nickel mining company Mincor Resources NL today announced board approval for a major expansion of its Miitel mining operation.
Kambalda nickel mining company Mincor Resources NL today announced board approval for a major expansion of its Miitel mining operation. This followed completion of a positive feasibility study on the proposed $24 million development of the South Miitel orebody.
Subject to finalisation of the implementation plan, Mincor will proceed with development of the South Miitel Project after completing a feasibility study which confirmed the viability of a profitable nickel mining operation with an initial 4-year mine life.
South Miitel is located immediately south of Mincor's flagship Miitel Mine, its first Kambalda nickel mine, and its development amounts to a major expansion of the Miitel mining operation. Very importantly, its development will open up the entire southern end of the Miitel ore trend for further exploration, with a high expectation that substantial additional reserves will be defined over time.
The South Miitel development is based upon an initial Probable Ore Reserve of 376,000 tonnes @ 2.6 per cent nickel for 9,790 tonnes of nickel metal. Capital development costs are estimated at $24 million over the life of the operation, with cash operating costs forecast at $4.80 per pound nickel.
Using nickel prices based on the current forward price curve and a flat US$4 per pound after November 2008, South Miitel's pre-tax cash flows are estimated to have a Net Present Value of $20 million (using an 8 per cent discount rate) and an Internal Rate of Return of 79 per cent. The Project is forecast to generate a net undiscounted pre-tax cash flow of $26 million.
The development of South Miitel will involve an extension to the existing Miitel decline and the excavation of a ventilation shaft to surface. Mining will proceed using mechanised flat-back cut-and-fill - a well-proven, safe and productive mining method. Mincor is in the final stages of implementation planning, and will make a final decision shortly on whether to develop and mine the ore body on an owner-operator or contractor basis.
Mincor managing director David Moore said that, in addition to the attractive financial returns from the project, the development of South Miitel would create the opportunity for further substantial expansions to the Miitel operation.
"This represents the sixth substantial mining operation or expansion to be developed by Mincor at Kambalda, and will further enhance our asset base and production profile in this prolific nickel belt," Mr Moore said.