Bigger future for Santa Rita with bigger resource

Nothing succeeds in mine development like drilling success. Mirabela Nickel (MNB-T, MBN-A) will start a scoping study on building a smelter at the Santa Rita nickel project in Bahia state, Brazil, after a new resource calculation showed a 40% increase in the size of the Santa Rita nickel deposit.

The new resource, constrained inside a pit design, amounts to 69 million measured and indicated tonnes grading 0.61% nickel and 0.15% copper, plus an inferred resource of another 7 million tonnes grading 0.53% nickel and 0.15% copper. The pit design shows a stripping ratio of 7.7 and the resource has an average cutoff grade of 0.38% nickel.

The resource is based on 313 drill holes and 73,500 metres of drilling. Another 27 holes Mirabela has drilled since work started on the resource estimate, including some holes on the deposit’s Southern Deeps zone, are not part of the figure.

Adding the resources that are outside the proposed pit boundary, Santa Rita is now known to have a measured and indicated resource of 89 million tonnes, at average grades of 0.57% nickel and 0.14% copper, plus an inferred resource of 15.2 million tonnes at 0.51% nickel and 0.14% copper.

Resource drilling over the past six months had blocked out mineralization in the deeper part of the deposit’s Central Zone and along the strike extension of the Southern Zone. With a larger pit needed to enclose those resources, preliminary pit designs, based on operating cost estimates from a feasibility study now under way, incorporated geotechnical data that showed the need for a shallower angle on the pit slopes to achieve stability.

The result was a higher stripping ratio, but that was offset by a higher nickel price; where the previous estimate was based on a price of US$10,450 per tonne (US$4.75 per lb.), the new one uses US$13,200 per tonne (US$6 per lb.).

Mirabela’s consultants, Croeser, also did some initial-stage mine scheduling, designing a starter pit with a stripping ratio below 3 that could be mined in the first four years of the project. Measured and indicated resources in that pit totalled 15.6 million tonnes at grades of 0.64% nickel and 0.15% copper, with both the lower stripping ratio and the higher grade contributing to a faster payback of capital.

For the next 10 years of mine life, the operation could push back to a pit with a stripping ratio of 4.6, which holds 37.5 million tonnes grading 0.6% nickel and 0.15% copper, plus inferred resources of 1 million tonnes at 0.46% nickel and 0.14% copper.

The cutoff grade of 0.38% nickel is a weighted average based on the four rock types hosting the mineralization, with variable fractionation of nickel between silicates, from which the nickel could not be recovered in conventional milling, and sulphides. Olivine-rich dunite, representing about 4% of the mineralized rock, carries a greater fraction of nickel in silicates, and mineralization in dunite is cut off at 0.5% nickel. In pyroxenite, which of the four rock types has the greatest proportion of its nickel in sulphides, the cutoff grade was set at 0.35%. Two rock types intermediate between dunite and pyroxenite, making up 55% of the mineralized material, were assigned cutoff grades of 0.4%.

Assigning lower cutoff grades in the four types — ranging from 0.3% in pyroxenite to 0.45% in dunite — increased the measured and indicated resource to 82 million tonnes grading 0.57% nickel and 0.14% copper, plus 9.5 million tonnes of inferred resources that averages out to 0.47% nickel and 0.13% copper. The lower-grade resource is constrained by the same pit shell.

There are two possible ways to exploit the additional low-grade material, which is mostly near the surface, in the pit: either it could be stripped early and stockpiled for mill feed late in the mine’s life, or it could be treated as ore, allowing a higher throughput rate in the mill without changing the mining rate (as it would have to be stripped anyway).

A feasibility study was scheduled for delivery in May, though results have not yet been announced. However, Mirabela contracted in April for a semi-autogenous grinding mill and a ball mill, with delivery slated for late 2008. At that time all that remained to be done in the feasibility study was the revised resource estimate (just released), plus capital and operational costing, some metallurgical test work, and a definitive mine design.

Metallurgical work to date has established recoveries of 67% to 69% in a nickel concentrate grading 13% to 15% nickel.

Ongoing feasibility work is likely to be based on a larger milling rate, and the company is studying the economics of building a smelter that would take 150,000 tonnes concentrate annually to produce a nickel matte grading 50% to 60% nickel. Given concentrate grades of 12% to 13% nickel, this implies production of about 35,000 tonnes of matte containing 19,000 tonnes nickel each year.

MIRABELA NICKEL (MNB-T), SANTA RITA DEPOSIT

LOCATION: Bahia state, Brazil

DEPOSIT TYPE:Nickel in ultramafic intrusion

IN-PIT RESOURCE: 69 M t at 0.61% Ni, 0.15% Cu, plus 6.8 M t inferred at 0.53% Ni, 0.15% Cu; cutoff grade 0.38% Ni, stripping ratio 7.7

EXPANDED RESOURCE: 82 M t at 0.57% Ni, 0.14% Cu, plus 9.5 M t inferred at 0.47% Ni, 0.13% Cu; cutoff grade 0.33% Ni, stripping ratio 6.2

DEVELOPMENT PLAN: Starter, mid-life, and final open pit; conventional flotation mill producing nickel concentrate; possible smelter

ANNUAL PRODUCTION: 19,000 t/yr nickel, subject to updated feasibility study

SCHEDULE: Construction through 2008; commissioning 2009