Inco ready to develop Goro

With feasibility studies now complete, nickel producer Inco (N-T) has decided the Goro nickel project, in the French Pacific territory of New Caledonia, should be brought into production.

Chairman Michael Sopko announced the decision to develop Goro at Inco’s annual meeting in Toronto. The US$1.4-billon project is expected to produce 54,000 tonnes nickel and 5,400 tonnes cobalt annually at a cash cost under US$2,200 per tonne. Construction is slated to start this year, and Inco expects to be in commercial production by late 2004.

The Goro deposit is a nickel-bearing laterite near the southeastern end of New Caledonia island, about 35 km east of Noumea. Inco estimates a minable reserve of 47 million tonnes grading 1.59% nickel and 0.17% cobalt, plus a resource of 219 million tonnes grading 1.57% nickel and 0.18% cobalt.

The laterite material has responded well to pressure-acid-leach (PAL) technology, broadly similar to the PAL system that has been used with limited success in Western Australia. Anaconda Nickel‘s Murrin Murrin project, now running at 65% capacity, was supposed to have been in full production in 2000; Preston Resources, which operates the Bulong nickel laterite project, is trying to attain “a steady rate” of production; and Centaur Mining, operator of the Cawse project, is in receivership, though not entirely because of its problems at Cawse.

Inco insists that its PAL system will succeed where the Australian ones failed, because a 12-tonne-per-day pilot plant has been running at Goro since October 1999. The other major difference between the Goro PAL plant and that at the Australian projects is the principal solvent-extraction reagent, which is more selective for nickel and cobalt than the ones used in the Australian PAL processes, eliminating several downstream purification circuits.

Inco also says it is in discussions with several companies — not all of them, nickel producers — to acquire a minority interest in Goro. Bureau de Recherches Gologiques et Minires (BRGM) is a 15% partner in Goro, though the French agency concentrates on exploration and generally cashes out once a project reaches the development or production stage. Inco, which has shed debt drastically since it acquired the Voisey’s Bay nickel deposit in Labrador, expects to finance Goro out of cash and debt, though the annual meeting approved the issue of a further $750 million (Canadian) in preferred-class shares. Inco reported US$1.2 billion in current assets, including US$332 million in cash on its most recent quarterly balance sheet.

Negotiations on the development of Voisey’s could be under way “in the next month or so,” Hand said. Inco put development on hold in 1998 after the government of Newfoundland insisted a lease would not be granted unless Inco undertook to build a smelter-refinery complex in the province.

While there has been speculation that Premier Roger Grimes’s new government may be more flexible (or have more room to compromise) on the issue of full processing in Newfoundland, the company and the government have been limited to informal contacts, and recently the two parties have only discussed the time formal talks might resume.

Inco also announced that its first-quarter earnings were US$85 million (US42 per share) on revenue of US$586 million. (In the first quarter of 2000, Inco had earned US$101 million on revenue of US$774 million, and for all of 2000, earnings totalled US$400 million on revenue of US$2.9 billion.)