Crew Development (CRU-T) has put a halt to all project development at its nickel laterite project on Mindoro Island, following notification from the Philippine Department of Environment and Natural Resources (DENR) that a mineral production agreement covering a portion of the project has been cancelled.
“This action by the DENR was unexpected and the notice issued without prior consultation with the company,” says Crew in a prepared statement. “The company is convinced that there is no basis for the cancellation, which was made without due process, and will take vigorous action to re-establish tenure.”
John Darch, Crew’s CEO, says the DENR did send a notice outlining various reasons for the cancellation, but the company doesn’t fully follow the reasons and doesn’t find them relevant.
“We certainly take the view that there is no basis for cancellation,” he says.
Crew is examining the development with its legal counsel and is “extremely confident ” that the agreement will be re-established.
The agreement was originally issued in January by the previous administration. It covers a total measured and indicated resource of 72.6 million tonnes averaging 0.94% nickel and 0.06% cobalt, including 21.4 million tonnes of 1.16% nickel and 0.06% cobalt. The company says potential resources on the concession have been estimated in excess of 200 million DMT.
The MPA gave Crew the exclusive right to develop the property, which is located about 200 km south of Manila, into a producing mine for a period of 25 years.
Crew plans to use High Pressure Acid Leaching (HPAL) to produce 40,000 tonnes nickel, 3,050 tonnes cobalt and 126,000 tonnes ammonium sulphate (rice fertilizer) annually.
The company intends to advance Mindoro through the bankable feasibility stage and then shop around for a major partner. A resource evaluation and optimization for the study was slated for completion during the second quarter.
A 1998 prefeasibility study indicates a net present value of US$467 million (at a 10% discount)and an internal rate of return of 39% for the project. Capital cost to bring the project to production is pegged at US$665 million.
Over a 20-year lifespan Crew expects the mine to produce 40,000 tonnes nickel and 3,050 tonnes cobalt annually. Total cash costs are estimated at US$1.06 per lb. nickel.
The company says it doesn’t expect any similar problems to arise with regard to its Pamplona project, also in the Philippines.
Last March, Crew exercised an option to acquire 100% of the Pamplona sulphur deposit on Negros Island. The company sees Pamplona as a stand-alone project, but could use the sulphur to produce sulphuric acid for acid leaching at Mindoro and other similar projects in the region.
Previous work indicates an open-pittable reserve of 60 million tonnes grading 30.8% sulphur within a resource of 84 million tonnes.
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