Brilliant to acquire 25% of Aussie nickel mine

Vancouver – Expanding its roots into Australia, Brilliant Mining (BMC-V) plans on acquiring 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-to-2002, when WMC Resources, now BHP Billiton (BHP-N) subsidiary Nickel West, divested from the project. Donegal and JV partner Sally Malay Mining (SMY-A) purchased the assets in late-2004 and recommenced production in early-2005.

The joint venture has a long-term purchase agreement in place whereby Nickel West will buy up to 350,000 tonnes of ore annually for processing at its Kambalda nickel concentrator.

Mineral resources at Lanfranchi are estimated from 2.4 to 3.6 million tonnes grading between 1.6% to 2.3% nickel, hosted in ten mineralized lenses or pods. 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-to-500 metres in length, 30-to-80 metres in width and from 0.5-to-30 metres thick.

Lanfranchi mineralization remains open to depth, beyond the maximum 700-metre 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 (consisting of a share and one-half a warrant) and a $5 million unsecured convertible debenture to the vendors. Sally Malay Mining, 75%-owner of the Lanfranchi JV, holds a right of first refusal on Donegal’s 25% interest.