Already sourcing nickel in concentrate from
Concentrate from the two mines will be processed at Inco’s operations in Thompson, Man.
The Maggie Hays deposit is 3 km south of the smaller Emily Ann nickel mine. A recently completed feasibility study pegged Maggie Hay’s indicated resources at 633,000 tonnes grading 3.55% nickel.
LionOre expects incremental production from a high-grade section at the upper part of the Main zone (indicated resource: 633,000 tonnes grading 3.55% nickel) to begin in the second half of 2003. A lower, massive-sulphide zone (probable reserve: 475,000 tonnes at 3.55%) would begin producing in the third quarter of 2004 (T.N.M., Feb 3-9/03).
LionOre recently exercised its option to acquire the Maggie Hays nickel deposit and the surrounding Lake Johnston exploration tenements. The price tag was A$16.7 million, with A$6 million to be paid in April and the balance, over the next six years.
Combined with the Emily Ann mine, nickel production from the Lake Johnston region is expected to climb to 7,000-8,000 tonnes annually. During 2002, Emily Ann churned out 5,301 tonnes of nickel at US$1.93 per lb.
Also as part of the pair’s “strategic alliance,” Inco will subscribe to 4 million LionOre shares at $5.75 apiece. LionOre will use the proceeds to repay a $22.1-million loan from Inco.
Inco will also foot the bill for a 4-year, A$15-million exploration campaign on LionOre’s Lake Johnston tenements and the nearby, 90%-owned Southern Cross tenements. In return, Inco will gain a 40% stake in any major nickel discoveries.
The agreement also calls for the two to collaborate on research and development of processing technologies for the recovery of base metals from sulphide ores, including LionOre’s proprietary Activox hydrometallurgical process.
During the last three months of 2002, LionOre earned US$3.6 million (or 2 per fully diluted share) on revenue of US$42.7 million, compared with a loss of US$1.5 million (1 per share) on revenue of US$489,254 in the corresponding period of 2001. Cash generated from operations rose to US$861,812 from US$260,178.
Overall, earnings in 2002 came to US$2.7 million (or 2 per fully diluted share) on revenue of US$62.8 million, compared with a loss of US$555,474 (nil per share) on US$870,465 in 2001. Cash flow climbed to US$5.2 million from the US$6.6 million consumed in 2001.
Anglo American deal
The latest results include those of Tati Nickel Mining Co., which has operations in Botswana. In late September 2002, LionOre acquired a 43.35% stake in Tati, a 7.5% direct interest in BCL, and a 12.65% stake in Botswana RST (which in turn owns 85% of BCL) from
Tati Nickel operates two mines near Francistown: Selkirk, an underground operation, and Phoenix, an open pit. In 2002, Tati produced 7,503 tonnes of nickel, up from 6,305 tonnes in the previous year, while cash costs climbed to US$2.35 from US$1.83 per lb.
LionOre’s board has approved a US$9-million Activox demonstration plant at Tati Nickel.
Tati chipped in earnings (before minority interests) of US$1.3 million for the fourth quarter and US$2.6 million for all of 2002, down from US$4.1 million and US$12.7 million, respectively, in corresponding year-earlier periods. Earnings were hampered by a strengthening pula and higher operating costs associated with the ramping-up to full steam of the new concentrator.
Meanwhile, the BCL smelter, which had been shut down for repairs to the uptake shaft of the flash smelting furnace, has resumed processing Tati Nickel’s concentrate. Some 292,000 tonnes are to be processed this year.
At the end of 2002, LionOre had US$29.3 million in cash and equivalents, double that of a year earlier. However, long-tern debt was US$75.1 million, or more than double the figure reported at the end of 2001.
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