Mirabela studies smelter option at Santa Rita nickel project

It would cost Mirabela Nickel (MNB-T, MBN-A) about US$254 million to build a nickel sulphide smelter for its Santa Rita project in Brazil, a scoping study reveals. Operating costs would clock in at roughly US$111 per tonne of concentrate.

Mirabela plans to start producing nickel concentrate at Santa Rita in 2009 and now plans to move ahead with a smelter feasibility study.

Apart from lowering transportation costs and improving economies of scale, the company says demand for nickel matte, the smelter product, will be even stronger than demand for nickel concentrate, and a smelter would strengthen the company’s strategic position in the nickel market.

“Philosophically, we just want to grow the value of the project so we’re exploring all of our options and this is one of them,” Nick Poll, Mirabela’s managing director, told The Northern Miner from Perth, Australia.

“We are not currently intending to build a smelter but we’re interested in the economics of the smelter project. If the feasibility study has a very positive outcome and it’s perceived to be a good move for the company, we’ll think about it at a later stage.”

Mirabela says Santa Rita is the world’s largest greenfield nickel sulphide discovery in the last 12 years and hosts the third-largest open-pit nickel sulphide mining reserve.

“We are targeting to double our resource to one million tonnes of contained nickel and given the potentially very long life of the mine we think it’s prudent to discuss downstream processing options,” Poll explains.

Santa Rita has proven and probable reserves of 84 million tonnes grading 0.61% nickel.

“We’ll be increasing this mining reserve within the next four to five months and are targeting over 100 million tonnes in mining reserves,” Poll adds.

The smelter scoping study was completed by WorleyParsens, a specialist in pyrometallurgical processing, and was based on a 230,000-tonne-per-year concentrate throughput rate, a 12% nickel concentrate grade, and annual production of 25,000 tonnes nickel.

Those assumptions are consistent with a production rate of about 6 million tonnes a year.

The current planned capacity of Santa Rita is 4.6 million tonnes a year for 18,500 tonnes nickel. But that is expected to grow to 6 million tonnes for 25,000 tonnes nickel within the first year of operation due to the continued growth of the resource, Poll explains.

Mirabela is continuing to boost in-pit reserves and assess the potential for an underground mining operation below 500 metres.

New drilling results released on Feb. 11 extended mineralization about 120 metres downdip of the open-pit mining reserve, with composite intersections of up to 135 metres grading 0.83% nickel in the southern high-grade zone.

Santa Rita is in southern Bahia state, about 180 km southwest of Salvador de Bahia, a city of 2.5 million people. It is accessible by paved roads and is just 140 km from the coast.

Mirabela started building a nickel sulphide concentrator at Santa Rita in November.

In Toronto on the news, Mirabela’s shares traded up 5 to $4.79 on a trading volume of 26,730 shares.

On the Australian Securities Exchange, Mirabela’s shares were unchanged at A$5.25 apiece.