Mirabela Nickel’s Santa Rita shines

When Mirabela Nickel’s (MNB-T, MBN-A) Santa Rita hard rock nickel deposit in Brazil starts producing 18,500 tonnes of nickel in concentrate a year beginning in mid-2009, it will be one of the world’s largest independent sources of nickel sulphide on the market, says managing director Nick Poll.

The geologist and former management consultant says Santa Rita could be churning out 25,000 tonnes of nickel in concentrate a year within the first two years of production.

“Santa Rita is the largest nickel sulphide greenfield site since the discovery of Voisey’s Bay,” he tells The Northern Miner.

Those claims are bolstered by a new resource calculation released late last month showing a measured and indicated resource of 90 million tonnes grading 0.6% nickel and 0.16% copper. The estimate represents a 30% increase in the in-pit resource since June.

An additional inferred resource runs to 10.7 million tonnes at grades of 0.6% nickel and 0.17% copper. The estimate uses variable cutoff grades, corresponding to each major host rock unit. Weighted by the abundance of each rock type, the average cutoff grade is 0.36% nickel.

Poll says he believes the company can expand that resource by another 20 to 30 million tonnes, citing as evidence the fact that Mirabela expanded its resource by 94% in the last year alone.

“It’s completely open at depth and to the south,” he explains. “We’re getting more high-grade at depth in the southern zone. I don’t know whether we’ve drilled one-eighth, one-quarter, or one-half of this deposit — it’s that big.”

Poll says he expects to conclude offtake agreements in the first quarter of 2008. And much of the paperwork to start construction has been done. Mirabela has 99% of its environmental permitting completed, he says, and expects the remainder to be finished within the month.

In addition, Poll says Mirabela is “well advanced in terms of generating debt financing” and has all of its equity financing in place. “We’re not raising any more money,” he says. “We’ve already got interest from a lot of banks to provide all the debt we need. So we’re holding on very tightly to our equity now.”

Indeed, the project looks so promising that Mirabela is considering building a smelter. The nearest smelter is in the city of Aratu, about 340 km away from the project.

Mirabela will use a straightforward sulphide leach flotation process, Poll says.

A pit designed around the resource has a stripping ratio of 7.6, and inside the pit shell is a low- grade measured and indicated resource of 38.2 million tonnes grading 0.31% nickel and 0.07% copper, plus inferred resources of 3.4 million tonnes at 0.29% nickel and 0.08% copper.

The low-grade resource is considered part of the pit waste for the stripping ratio calculation, but current plans are to stockpile it for processing at the end of the pit’s life.

Mirabela picked up Santa Rita from a state government agency in 2003. The company listed on the Australian Stock Exchange in June 2004 and started drilling in Brazil two months later. A listing on the Toronto Stock Exchange followed in February this year.

Poll says the mine, which will have a lifespan of 16 years, is in a good location in southern Bahia state, about 180 km southwest of Salvador de Bahia, a city of 2.5 million people. It is also accessible by paved roads and is just 140 km from the coast. And the mine can tie into the state power grid, about 6 km away.

Mirabela is also bullish on Brazil as a good place to run a mining company and where international bankers no longer require political risk insurance. Poll says he has seen “a maturation of the mining services industry” in the country over the last 15 years.

He is quick to add that the Brazilian operating environment is getting “really good” — with short waiting times for permitting and strong government support. Title is considered very good, he adds, and public finances are becoming better managed.

“The days are over where discounts are given to Brazil projects,” Poll says.

— Nick Poll, managing director of Mirabela Nickel