Canadian Arrow says Kenbridge nickel project is economic

The average cost of producing a pound of nickel at the Kenbridge nickel project in northwestern Ontario, net of byproduct credits for copper, will be about C$4.89 per lb well below the current nickel price of about C$12 per lb., Canadian Arrow Mines (CRO-V) says.

The base metals exploration and development company noted in a statement today that the preliminary economic assessment study of its 100%-owned Kenbridge project near Kenora indicates that it “has the potential to become a very profitable operation.”

Based on expected mining costs and economics, about 71.2 million lbs. nickel and 49.6 million lbs. copper could be profitably recovered over a 10.5 year mine life.

The economic assessment also found that a combined open pit and underground mining operation could supply 2,800 tonnes per day to an onsite concentrator.

The economics of the project were based on an average price of US$10 per lb. nickel and US$2.50 per lb. copper.

The study also forecast a relatively speedy payback period of 2.8 years.

The project would offer a pre-tax present value of C$134 million at a 7.5% discount rate and an internal rate of return of 33%.

Resources amenable to open-pit mining total 6.7 million diluted tonnes grading 0.38% nickel and 0.23% copper with a stripping ratio of waste to ore of 1:87:1 to a depth of 160 metres.

Resources amenable to underground mining total 3 million diluted tonnes grading 0.63% nickel and 0.32% copper, the assessment found.

The study calculated open pit mining costs of C$9.60 per tonne and underground mining costs of C$41.44 per tonne. Processing costs would tally about C$10.39 per tonne.

Pre-production capital costs would reach about C$108 million including a 15% contingency.

Canadian Arrow purchased 100% of Kenbridge from Falconbridge in May 2006. Falconbridge had explored the property in the 1950s.

Development work included a 607-metre shaft, 1,006 metres of horizontal development and 15,240 metres of drilling in 247 drill holes.

Canadian Arrow expects to complete a bankable feasibility study later this year.

Surface diamond drilling will continue to define the deposit to the bottom of the shaft. Underground diamond drilling is scheduled for the late summer to explore the deposit’s open extensions below the shaft and along the south strike.

Canadian Arrow expects to install a headframe and dewater the shaft by the middle of the year.

Mineralization is hosted by a lenticular gabbroic intrusive complex at least 2000 feet in length that has intruded a sequence of mafic volcanic rocks in the Wabigoon Greenstone belt, the company notes on its website.

The gabbro complex lies within and parallels a prominent north-northeast striking regional fracture zone. Nickel, copper, cobalt, gold and PGE mineralization is concentrated in brecciated norite and amphibolite phases of the intrusion.

Canadian Arrow’s shares on the TSX Venture Exchange were trading up 4 apiece to 29 on a trading volume of 701,500 shares.

The company has a 52-week trading range of 21 cents to 72. Canadian Arrow has 63.2 million shares outstanding.