Just days before its rights to the Nakety and Bogota nickel-cobalt concessions in the French Pacific territory of New Caledonia were set to expire,
Noril’sk can earn an initial minority interest by funding a bankable feasibility study and repaying Argosy a portion of its expenditure to date. Thereafter, the Russian company can earn a majority interest by arranging financing for the project and reimbursing Argosy for a further agreed-upon amount.
No other terms of the deal have been disclosed.
Argosy Minerals was formed as a result of the May 1999 merger of Aussie junior Calliope Metals and Vancouver-based Argosy Mining. In 1995, Calliope entered into an agreement with the Ballande Group company Societ des Mines de la Tontouta (SMT) to purchase nickel laterite ore, its objective being to build a pressure acid-leach (PAL) processing facility at Gladstone, Queensland.
The ore supply agreement was renegotiated in 1998 as a joint venture, in which Calliope would complete a feasibility study for the development of a high-pressure acid-leaching (HPAL) refinery on-site at the Nakety concessions. The project is 3 km inland, south of the town of Canala on the eastern coast of New Caledonia, 1,500 km east of Australia. The agreement was later amended to include SMT’s rights to 40 nearby Bogota concessions, bringing the total project area to 64.3 sq. km.
The interest in the joint venture will be established upon completion of a feasibility study that concludes the project is viable. The shareholdings of Argosy and SMT will depend on the equity contributions made by each party, though SMT has advised Argosy it will seek a 10% level of participation.
Unable to raise funds to advance the nickel laterite project on its own, Argosy Minerals had until July 31, 2001, to find a suitable third party that would complete the feasibility study and provide financing guarantees in return for an equity interest in the joint venture, or it ran the risk of losing its rights to the concessions.
The decision by Noril’sk to participate in the New Caledonia joint venture was made after about 10 months of negotiations, in-house and independent evaluations, and meetings with senior representatives of the New Caledonia authorities.
Processing options
The feasibility study will be performed on behalf of the joint venture by Bateman Engineering and will consider different laterite processing options, including PAL. Argosy says the bankable study will be comprehensive and address all technical, environmental, financial and social concerns. “Given the lessons learned by the industry from the Western Australia laterite mines, many significant engineering enhancements will be built into the next generation of pressure acid-leach plants,” states the company.
The Nakety property consists of four areas of mineralization that were drill-tested between 1969 and 1996, with 676 holes totalling 19,948 metres. The drilling and sample data were reviewed in March 1998 by Resource Services Group, which estimated a measured and indicated resource of 34.5 million dry tonnes (or 52.4 million wet tonnes) of limonite and saprolite material grading 1.53% nickel and 0.11% cobalt. An additional inferred resource stood at 48.3 million dry tonnes (73.1 million wet tonnes) grading 1.42% nickel and 0.12% cobalt. Nakety is currently being mined by SMT on a small scale for saprolite.
Initial tests performed by Dynatec on bulk samples from the Nakety deposits showed metallurgical recoveries of 95% for nickel and 92% for cobalt.
Scoping study
A scoping study by Argosy and Kvaerner in January 1998 examined the possibility of constructing an on-site PAL plant at Nakety, which would produce 34,500 tonnes nickel and 2,700 tonnes cobalt annually, based on a throughput of 4.1 million wet tonnes per year.
On the neighbouring Bogota concessions, previous exploration included the drilling of 196 holes totalling 5,654 metres on eight of the 40 concessions in the 1982-1995 period.
The selection of drill targets was based on geological mapping by government agencies Service des mines et de l’energie and Bureau de recherches geologiques et minieres.
Of the 193 holes examined by Argosy, 97 holes carried grades exceeding 1% nickel over widths of 5 metres in the limonite zone, whereas 70 holes carried grades of plus 1% nickel across 5 metres in the saprolite zone. Based on the areas drilled, Argosy estimated a preliminary resource of 67 million dry tonnes of limonite and saprolite material grading 1.4% nickel and 0.11% cobalt.
Argosy further extrapolated a potential resource target of somewhere in the neighbourhood of 140-176 million tonnes by incorporating the area of mapped laterite not yet drilled.
Argosy Chairman Yale Simpson says Noril’sk became involved because of the significant exploration upside of the Bogota concessions. Argosy believes the Nakety and Bogota concessions could support a 50,000-tonne-per-year nickel operation, based on 6 million wet tonnes per annum.
Argosy has 95.8 million shares outstanding, or 99.7 million fully diluted.
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