Halmahera project put on the shelf

Vancouver — Political uncertainty in Indonesia has come home to roost for prospective nickel laterite miner Weda Bay Minerals (WDA-T).

The company has suspended work on its nickel and cobalt project on the Island of Halmahera, after its major shareholder and project financier voiced concerns about the government’s instability.

Cobalt producer OM Group (OM-N), which has a 19.9% stake in Weda Bay, decided to stop advancing funds for the project. The group says that, under the current market conditions, it would be difficult to raise funds to develop the deposit.

As a result, the project has been suspended. However, OM Group will continue to provide the cash required for Weda Bay to meet its related financial obligations.

The junior recently tabled a positive prefeasibility study, which had been conducted by Kvaerner Process (Australia) and Hatch Associates. The study concluded that the project is robust at varying capital costs and production levels. The base-case proposes 48,500 tonnes nickel and 4,600 tonnes cobalt over 20 years.

The study envisions peak production occurring in years three, four and five. In each of these years, 52,600 tonnes nickel and 5,100 tonnes cobalt would be produced. Operating costs, exclusive of cobalt credits, are pegged at US97 per lb. nickel.

Weda Bay had been drilling the deposit in order to move the bulk of the resource from the indicated to the measured category. At last count, the company pegged the indicated resource at 66 million tonnes grading 1.4% nickel and 0.09% cobalt. The upper, limonitic portion contains 41 million tonnes of 1.2% nickel and 0.16% cobalt with a magnesium oxide content of 4.5%.

Overall, the property hosts an indicated resource of 133 million tonnes grading 1.4% nickel and 0.1% cobalt. Additional inferred resources are estimated at 70 million tonnes of 1.29% nickel and 0.14% cobalt, giving an aggregate resource estimate of 204 million tonnes of 1.37% nickel and 0.11% cobalt.

This resource is contained in 11 target areas, namely SM, Area 2, Uniuni Hill, Tarzan Hill, Sake River, Sake River West, Lipe River, Jira River, Casuarina, Orchid and Big Kahuna.

Weda Bay was moving toward an US$18-million bankable feasibility study, which was to have been funded by the OM Group.