Canadian Arrow says Kenbridge economic

The average cost to produce a pound of nickel at the Kenbridge nickel project in northwestern Ontario, net of byproduct credits for copper, will be about C$4.89 per lb. — well below nickel’s current price of more than C$14 per lb., Canadian Arrow Mines (CRO-V, CDARF-O) says.

The base metals exploration and development company noted in a statement that the preliminary economic assessment study of its 100%- owned Kenbridge project, near Kenora, Ont., indicates that it “has the potential to become a very profitable operation.”

Based on expected mining costs and economics, about 71.2 million lbs. nickel and 49.6 million lbs. copper could be profitably recovered over a 10.5-year mine life.

The economic assessment also found that a combined open-pit and underground mining operation could supply 2,800 tonnes per day to an on-site concentrator.

The economics of the project were based on an average price of US$10 per lb. nickel and US$2.50 per lb. copper.

The study also forecast a relatively speedy payback period of 2.8 years.

The project would offer a pretax net present value of $134 million at a 7.5% discount rate and an internal rate of return of 33%.

Resources amenable to open-pit mining total 6.7 million diluted tonnes grading 0.38% nickel and 0.23% copper with a stripping ratio of 1.87 to a depth of 160 metres.

Resources amenable to underground mining total 3 million diluted tonnes grading 0.63% nickel and 0.32% copper, the assessment found.

The study calculated open-pit mining costs at $9.60 per tonne and underground mining costs at $41.44 per tonne. Processing costs would tally about $10.39 per tonne.

Preproduction capital costs would reach about $108 million, including a 15% contingency.

Canadian Arrow purchased 100% of Kenbridge from Falconbridge in May 2006. Falconbridge had explored the property in the 1950s.

Development work included a 607-metre shaft, 1,000 metres of horizontal development and 15,240 metres of drilling in 247 drill holes.

Canadian Arrow expects to complete a bankable feasibility study later this year.

Surface diamond drilling will continue to define the deposit to the bottom of the shaft. Underground diamond drilling is scheduled for the late summer to explore the deposit’s open extensions below the shaft and along the south strike.

Canadian Arrow expects to install a headframe and dewater the shaft by the middle of the year.

Mineralization is hosted by a lens shaped gabbroic intrusive complex at least 2,000 ft. long that has intruded a sequence of mafic volcanic rocks in the Wabigoon greenstone belt, the company notes.

The gabbro complex lies within and parallels a prominent north-northeast- striking regional fracture zone. Nickel, copper, cobalt, gold and platinum group element mineralization is concentrated in brecciated norite and amphibolite phases of the intrusion.

Canadian Arrow’s shares recently traded at about 29 each in a 52-week trading range of 21-72.