Feasibility study on track for Loma de Hierro

Gold is not the only commodity of interest to mining companies active in Venezuela. Jordex Resources (TSE) recently announced interim results from a feasibility study on its Loma de Hierro nickel laterite project, 90 km from the seaport of Puerto Cabello.

The company and its Venezuelan partner signed an agreement in mid-1993 allowing Anglo American South America (AMSA) to buy a 70% interest in Loma de Hierro. AMSA has already earned 10% and expects to complete a feasibility study by the first quarter of 1995.

Based on the interim results, geological reserves are 35.7 million tonnes grading 1.57% nickel, using a 1.2% nickel cutoff. It is envisaged that the project will be developed using an annual throughput of 1.2 million tonnes grading about 1.71% nickel during the first five years, followed by at least 20 additional years at a grade of about 1.56% nickel.

Jordex Chairman Paul Kostiuk said the study confirmed reserves and metallurgical results of earlier prefeasibility work. “These positive results are particularly timely as we are now entering the upswing of the next metals cycle.”

Jordex released details of other technical aspects of the study, including metallurgical test work done in South Africa to investigate the potential of using electric arc furnaces for smelting the fines arising during conventional processing. The results, described as “encouraging,” are currently under evaluation.

Pilot-plant testing was conducted in Norway on bulk samples using a local Venezuelan source of coal as reductant. This test work is reported to have confirmed the amenability of the ore to a process route using rotary kilns for calcining and pre-reduction followed by electric furnace smelting. The work also provided information necessary for engineering design. A local Venezuelan engineering firm has been retained to provide estimates of capital and operating costs, and a financial adviser will be appointed to investigate potential financing for the project.

Environmental studies are nearing completion, and negotiation of energy contracts (electrical power and gas) is under way. The deposit is near electric and gas lines, providing access to low-cost power. This is an important factor, as ferro-nickel production is energy-intensive, consuming several times as much electricity as is required to produce a tonne of aluminum.

In the study, Loma de Hierro’s annual production was estimated at 35-40 million lb. of low-cost nickel, generating sales of $200 million per year. AMSA already produces ferro-nickel at two locations in Brazil. The Loma de Hierro deposit was discovered and partially drilled by Inco’s American division in the early 1940s, with subsequent work done by the government. Development plans in past decades were hindered by an onerous tax regime and investment climate. The project’s revival owes much to the 1991 tax reforms, which triggered renewed interest in Venezuela’s mineral potential.