Australian-listed LionOre Nickel, a 75%-owned subsidiary of
Emily Ann’s development will cost A$42 million in preproduction expenditures. Of this, $25 million will be spent on construction of a concentrate treatment plant. The remaining A$17 million will go toward mine development and related surface construction.
Inco has agreed to finance plant construction, development and associated infrastructure. Under certain conditions, including nickel-hedging, NM Rothschild & Son will provide short-term funding for development of an underground mine and associated infrastructure.
Also, an off-take deal allows LionOre to provide Inco with all of its Emily Ann nickel concentrate production for the life of the mine. The agreement also allows LionOre Nickel to include its share of any nickel concentrate that may be produced from the company’s 31% stake in the neighbouring Maggie Hays deposit. Australian-based QNI Ltd., a subsidiary of Billiton, holds the remaining stake in that deposit. The deal also includes a 10-year, US$16-million loan to LionOre Nickel from Inco.
The mine is 540 km east of Perth in the Lake Johnston greenstone belt and is slated to begin production by the end of 2001. The high-grade Emily Ann nickel-sulphide deposit contains an estimated indicated and inferred resource of 2.1 million tonnes grading 3.98% nickel. Probable reserves are pegged at 1.2 million tonnes grading 3.4% nickel. That estimate is based on a nickel price of US$2.50 per lb. and conservative mine recovery and dilution factors.
LionOre envisions an underground mine feeding an on-site conventional nickel-sulphide concentrate plant at an annual throughput rate of 250,000 tonnes for an average of 6,700 tonnes of payable nickel each year. Average cash costs are expected to be US$1.55 per lb. (including byproduct credits).
Work on the mine began in September, and geotechnical drilling, to confirm the location of the box cut and decline, has been completed. A de-watering drilling program has begun, and five of the six planned production bores have been completed. Site establishment has commenced and key pieces of equipment have been ordered. Production could begin as early as the first quarter of 2002.
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