Koniambo clears first hurdle

The ambitious Koniambo ferronickel project in New Caledonia’s Northern Province, near the provincial capital of Kone, has taken its first big step toward reality with the completion of a positive technical feasibility study.

The achievement is the first of two major requirements that must be met before partners Falconbridge (FL-T) and Socit Minire du Sud Pacifique (SMSP) can pick up stakes of 49% and 51%. Next, the pair must place firm orders for US$100 million worth of equipment and services for the project before Jan. 1, 2006.

Wardell Armstrong International completed a technical audit of the bankable feasibility study, which was completed in the fourth quarter of 2004. The audit concluded that the study was “prepared to a high standard and that all the technical aspects of the project are sound.”

Koniambo is home to measured and indicated resources totalling 142.1 million tonnes grading 2.13% nickel, plus an inferred resource of 156 million tonnes at 2.2% nickel. Both estimates are based on a cutoff grade of 1.5% nickel.

At a 2% nickel cutoff, measured and indicated resources slip to 75.6 million tonnes of 2.47% nickel. Another 100 million tonnes of inferred limonite resource grades 1.6% nickel and 0.2% cobalt. In all, the Koniambo deposit is considered one of the world’s largest and highest-grade nickel laterite deposits.

The partners envisage Koniambo as a 60,000-tonne-per-year nickel-in-ferronickel mining and smelting complex, with operating costs projected at US$1.65 per lb. The operation carries an estimated price tag of US$2.2 billion, not including some US$500 million for working capital and various financing, interest and contingency costs.

The capital cost does include a US$600-million 390-MW power station; the balance will cover the project’s metallurgical plant, and mine development and infrastructure, including a port and roads.

The partners and the French government are currently working to finalize the financing structure for the project. If all goes to plan, the giant project could conceivably start up as early as 2009.

New Caledonia is also home to Inco‘ (N-T) rival Goro nickel-laterite project, which is home to reserves of 57 million tonnes grading 1.52% nickel and 0.12% cobalt.

In April Japanese metal producers Sumitomo Metal Mining and Mitsui, under the Sumic Nickel banner, acquired a 21% stake in the project in return for US$150 million. Sumitomo owns 52.4% of Sumic Nickel, with Mitsui owning the remainder.

Goro is expected to produce 60,000 tonnes of nickel and 4,300-5,000 tonnes of cobalt per year, beginning in September 2007.

Inco retains a 69% stake in Goro, with the three provinces of New Caledonia owning the remainder.