Emerging nickel producer Western Areas NL has announced a decision to build a 250,000 tonne a year nickel sulphide plant to cost up to $25 million.
Emerging nickel producer Western Areas NL has announced a decision to build a 250,000 tonne a year nickel sulphide plant to cost up to $25 million.
The decision comes as a feasibility study into a stage two expansion of its high-grade Flying Fox nickel sulphide mine in the Forrestania greenstone belt, south of Southern Cross, nears completion.
Managing director Julian Hanna said the decision was a significant milestone on the road to bringing Forrestania online.
"Ownership of the plant is a big step forward for us," he said.
An existing agreement with LionOre Mining International Ltd to process ore produced from Flying Fox over the first few months at its Emily Ann plant will stand until capacity at the new Forrestania concentrator is available at the end of this year.
Total capital cost for the plant is estimated at between $20 million and $25 million, which takes into account plant acquisition, construction, village expansion and tailings disposal.
The company has commenced discussions with its existing financiers to consider funding the plant construction as part of a new debt facility for the proposed stage two Flying Fox expansion.
Western Areas acquired the plant's major components second-hand last year and are currently held under storage, with the exception being a crushing circuit, currently being sourced.
Mr Hanna said significant savings were able to be made in sourcing the second-hand equipment both in terms of capital cost and time.
"A capital cost of at least double the current estimates were the alternative, but the major issue was time, with time delay a major issue in Western Australia at the moment particularly in the area of fabrication."
Initial production at the plant is anticipated at 150,000 tpa, he said, ramping up to above that once stage two comes online.
In May 2003, Western Areas completed the acquisition of an outstanding 25 per cent interest owned by Outokumpu in Forrestania, giving it full ownership of the project.
Flying Fox was discovered in the second half of that year.
Last month, Western Areas lodged a prospectus to list on the Toronto Stock Exchange in Canada.
