Weda Bay boosts nickel-cobalt resource (September 11, 2000)

The initial stages of an US$18.2-million feasibility study on the Halmahera high-grade nickel laterite deposits in Indonesia have increased the indicated and inferred resource to 202.3 million dry tonnes grading 1.37% nickel and 0.12% cobalt for operator Weda Bay Minerals (WDA-T).

This marks a 73% increase over the previously defined total resource of 117 million tonnes grading 1.39% nickel and 0.1% cobalt.

“The growth in the project’s resource estimate confirms its status as one of the world’s leading nickel and cobalt deposits,” says Weda Bay President Lou Clinton.

Targeting the 9.3-sq.-km Santa Monica prospect, the initial drilling outlined an inferred resource of 75.8 million dry tonnes grading 1.38% nickel and 0.12% cobalt. The upper limonitic portion of the resource contains 47.5 million dry tonnes averaging 1.22% nickel and 0.17% cobalt with an magnesium oxide content of 4.8%.

The junior has identified a continuous northeast-southwest zone of thicker limonite within this resource. It hosts an inferred resource of 32.8 million dry tonnes containing 1.29% nickel and 0.18% cobalt with a magnesium oxide content of 4.6%. The company is drilling this area on a 200-by-100-metre spacing to convert to an indicated resource.

The updated calculation at Santa Monica is based on an additional 52 diamond drill holes on a 400-sq.-metre grid. To date, 63 holes have tested the prospect.

At the Big Kahuna prospect, the junior updated the inferred resource to 40.4 million dry tonnes grading 1.32% nickel and 0.17% cobalt. The total aggregate resource encompasses 11 target areas: Area 2, Uni-Uni Hill, Tarzan Hill, Sake River, Sake River West, Lipe River, Jira River, Casuarina, Orchid, Santa Monica and Big Kahuna.

Weda Bay expects the bankable feasibility study to be complete by the end of 2001. The OM Group, a Cleveland-based maker of specialty chemicals, has agreed to provide Weda Bay with up to US$18 million over the next 18 months to complete the feasibility study. OM also acquired 5.1 million shares of Weda Bay at $1.35 each for proceeds of $6.8 million.

Weda Bay envisions a pressure acid leach plant capable of processing up to 3 million tonnes per year over a 30-year operating life. During the first 10 years, the company will use higher-grade ore feed from the Sake River, Uni-Uni Hill, Tarzan Hill and Area 2 prospects. The stripping ratio is estimated at 0.21-to-1, while capital costs are pegged at US$555 million.

Weda Bay holds 90% of the project. The remainder is held by Aneka Tambang, a company owned by the Indonesian government.