Mirabela Adds To Santa Rita Resource

Mirabela Nickel (MNB-T, MBN-A) likes to describe its Santa Rita project in Brazil as the world’s largest greenfield nickel sulphide discovery in the last 12 years.

Now Mirabela has sweetened the project further with a maiden underground resource that lies immediately below the current openpit resource at depths of between 500 and 1,000 metres.

The company is now targeting 60-80 million tonnes of resources to support underground production of about 3 million tonnes per year over 20 years.

Santa Rita has an underground inferred resource of 55 million tonnes grading 0.82% nickel and 0.24% copper for total contained nickel of 450,000 tonnes. About 95% of that resource is hosted within one continuous zone of mineralization, with the remaining 5% of the resource found within two footwall horizons.

The main mineralized zone has an average true width of about 90 metres, a strike length of 300 metres, and a downplunge extent of 650 metres, Mirabela says.

So far, the best intersection to date — 158 metres at 0.99% nickel — is the deepest hole at the north end of the resource, with mineralization open towards the north, south and at depth.

Mineralization in the main zone is continuous and consistently above 0.5% nickel, with higher-grade intersections of up to 65 metres at 1.22% nickel and 0.36% copper. The spacing between drill holes is between 100 and 120 metres.

A prefeasibility study is under way. According to scoping studies, the underground resource appears to be suited to bulk underground mining techniques (at an annual production rate of between 3 and 5 million tonnes).

“Such operations have mining costs as low as US$20 per tonne,” Mirabela stated in a release.

An expansion of the Santa Rita concentrator, to include underground production, is viable and would probably bring significant economies of scale and infrastructure.

Mirabela notes that preliminary analysis suggests that the underground resource has similar metallurgical characteristics to openpit reserves. (About 82% of the underground resource is hosted by the preferred pyroxenitic rocks that contain less non-sulphidic nickel than other host rocks in the resource.)

The company says recoveries for the underground resource should be about 78% thanks to a higher head grade and pyroxenite content than the open-pit reserve, which has an average recovery of 70%.

Santa Rita has proven and probable open-pit mining reserves of 121 million tonnes grading 0.6% nickel.

The open-pit portion of Santa Rita has indicated and inferred resources of 150 million tonnes grading 0.6% nickel and 0.16% copper, for over 2 billion lbs. of contained nickel, with just 15% (119 million tonnes grading 0.6% nickel and 0.16% copper for about 260 million lbs. of contained nickel). Additional drilling is planned to convert the inferred resource to indicated next year.

Production from the open pit, which is 75% complete, is expected to start in the middle of this year.

“The new underground resource confirms the world-class status of the Santa Rita project and provides a great platform for future growth,” Nick Poll, Mirabela’s chief executive, said in an email exchange with The Northern Miner. “In the meantime, Santa Rita is on track to join the ranks of low-cost nickel producers that will survive at current nickel prices.”

At the Second Americas Nickel Conference in Rio de Janeiro in November, Poll described Santa Rita as having “the scale of a world-class nickel laterite deposit but the economies of a world-class sulphide deposit.”

Construction of a 6.4-million-tonne-per-year nickel sulphide concentrator began in November 2007 and is about 65% complete. The plant will produce 18,500 tonnes per year of nickel in a sulphide concentrate from the open pit and will raise that to 27,000 tonnes per year by the middle of 2010.

Mirabela believes the project will have a mine life of at least 20 years.

“We want to produce over 45,000 tonnes per annum of nickel in concentrate for twenty-five years,” Poll said during his corporate presentation in Rio.

Where does Santa Rita put Mirabela in the ranks of the world’s nickel producers, Poll asked. BHP Billiton’s (BHP-N, BLT-L) Mt. Keith open-pit nickel mine, a nickel sulphide deposit in Western Australia, contains 194 million tonnes grading 0.56% nickel, he noted, and that mine has a life of 17 years.

“I think we can do better than that,” he said. “In this current market of lower nickel prices, we think that companies will be cutting one-third of nickel production. Mt. Keith won’t be one of them. Neither will we. Santa Rita is a great long-term project and it will go ahead.”

In Toronto, Mirabela’s stock remained unchanged by the news at 70¢ per share. Over the last year, it has traded in a range of 52¢-$7.50 per share and has 127.8 million shares outstanding.