Vancouver — Expanding its roots into Australia, Brilliant Mining (BMC-V) plans to buy a 25% interest in the Kambalda-area Lanfranchi joint venture, which includes a producing nickel mine.
The deal will have Brilliant taking over private company Donegal Resources, which holds a one-quarter interest in the Western Australian nickel JV.
Underground operations at Lanfranchi produced about 3.2 million tonnes of ore averaging 3.18% nickel from 1987-2002, when WMC Resources, now BHP Billiton (BHP-N) subsidiary Nickel West, divested from the project after having spent about $95 million on capital infrastructure and development. Donegal and JV partner Sally Malay Mining (SLLYF-O, SMY-A) purchased the assets in late 2004 and restarted production in early 2005.
The joint venture has a long-term, ore-tolling and concentrate purchase agreement in place whereby Nickel West will buy up to 350,000 tonnes of ore annually for processing at its Kambalda nickel concentrator, located 42 km north. The agreement also includes guaranteed recoveries, mitigating any metallurgical risks that may arise.
A 2004 indicated and inferred resource calculation at Lanfranchi, based on Sally Malay’s reporting and compliant with Australia’s JORC code, reviews 3.65 million tonnes grading 2% nickel, hosted in a number of mineralized lenses or pods. In addition, a probable ore reserve of 607,431 tonnes averaging 3.27% nickel was calculated on three orebodies (Helmut South, Winner and Lanfranchi) tabled for development by the JV.
As typical in komatiitic or Kambalda-type nickel deposits, high-grade massive sulphides are concentrated in footwall embayments of ultramafic flows. The mineralized lenses at Lanfranchi range from 50-500 metres long, 30-80 metres wide and from 0.5-30 metres thick.
Lanfranchi mineralization remains open to depth, beyond the 700-metre maximum depth of past mining. A number of other Kambalda-area mines currently operate at depths of 1,200 metres, with some planning deeper development.
The main exploration effort is currently focused on the Schmitz orebody, which has produced over 750,000 tonnes of ore grading 4.5% nickel.
Brilliant’s acquisition of Donegal will see cash payments of $4.8 million, the issuance of 10.5 million units (comprised of a share and half a warrant) and a $5-million unsecured convertible debenture to the vendors. When the deal is exercised, Donegal founders and principals Ian and Leigh Junk will be slated for appointment or election to Brilliant’s board of directors.
Sally Malay Mining, 75% owner of the Lanfranchi JV, has waived its right of first refusal on Donegal’s 25% interest, removing one of the conditions in Brilliant’s planned acquisition.
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