Oriel advances Schevchenko

Vancouver — A newly completed feasibility predicts that the Shevchenko nickel deposit in the Kostanai district of Kazakhstan could operate for almost half a century. Production would peak in the first 10 years at an annual rate of 23,765 tonnes of nickel (in 109,000 tonnes of ferronickel) after an 18-month ramp-up period.

Shevchenko is owned 90% by Oriel Resources (ORL-T, ORI-L), a London-based company that has a contract to mine the deposit with the government of Kazakhstan. The project has proven and probable nickel-laterite reserves of 104.4 million tonnes at 0.79% nickel.

The feasibility study by Bateman Minerals and Metals estimates that it would cost US$448 million to build a mine and process plant and related infrastructure. This rises to US$594 million after including indirect costs, insurance and various other minor costs.

The average operating cost is estimated at US$1.91 per lb. nickel for the first 10 years of production, and US$2.12 per lb. nickel for the first 25 years. These numbers are considerably lower than the industry average cost of US$3.42 per lb., but do not include transportation costs, as the company is still finalizing an off-take agreement to cover worldwide sales of ferronickel.

The process plant would use a similar flow sheet and technology as has been proposed for nickel-laterite projects in New Caledonia, selected after extensive smelting and other metallurgical test work. Specifically, the plant is based on flash drying and calcining of the ore, and uses direct-current arc furnace smelting technology to produce a ferronickel alloy. The benefits of the process include low capital costs and high thermal energy efficiency and nickel recoveries, relative to other nickel mining operations.

Based on the study, the net present value (NPV) would be US$275 million for the first 25 years, with an ungeared internal rate of return (IRR) of 13.55%, while the NPV over the mine life would be US$328 million, with an IRR of 13.82%. All figures are based on a US$4.25-per-lb. nickel price (pre-tax).

Oriel is assessing various options to finance the mine project, including strategic partnerships with third parties.

The project is well serviced by utilities, including power and gas lines, and a railway line linked to rail systems serving the former Soviet Union and China. Assuming construction is completed as planned, the mine would employ 752 people in a region hard-hit by unemployment.