More nickel deposits join feasibility pipeline

While it’s no match for the Voisey’s Bay ovoid in the grade department, the Ramu nickel-cobalt project in Papua New Guinea (PNG) could join the ranks of the world’s lowest-cost nickel producers ahead of its politically stalled Labrador rival.

Unlike Voisey’s Bay, which will feature conventional pyrometallurgical processing, Ramu will bypass the smelting stage and make use of modern pressure-leach technology and solvent extraction-electrowinning to produce salable products of nickel cathode and cobalt sulphate. It is one of a growing number of nickel projects in Australia and Southeast Asia predicated on hy-drometallurgical processing.

Nord Pacific (NPF-T) holds a 35% interest in the project, situated near Madang, a seaport city on PNG’s northern coast. Work to date has outlined a resource of 143 million tonnes grading 1.01% nickel and 0.1% cobalt, which includes proven and probable reserves of 75.7 million tonnes grading 0.91% nickel and 0.1% cobalt.

A newly completed, 2-year-long, US$22-million feasbility study by Flour Daniel and H.A. Simons estimates that cash operating costs over the 20-year life of the project will average US$1.38 per lb. for nickel metal, or US$41 cents after cobalt credits, based on a cobalt price of US$10 per lb. The full cost of production is estimated at US88 cents per lb. of nickel, net of cobalt credit, including amortization of capital over 20 years but excluding financing charges.

Pierce Carson, Nord’s chief executive officer, says the results place Ramu near the bottom of the cost curve for nickel producers worldwide — “exactly where we must be to have a chance of achieving financing in these very difficult markets.”

Carson points out that Ramu has “excellent metallurgical characteristics,” a relatively high cobalt credit, and a favorable coastal location. Even so, he concedes that low prices and depressed financial markets are making it difficult to set a firm timetable for the start of production.

The company, together with its partner, Highlands Pacific, is investigating financing options for the project. Capital costs are estimated at US$838 million, including about US$200 million in infrastructure costs and US$50 million in working capital and owners’ costs. An engineering review of the feasibility study concludes that capital costs could potentially be reduced by as much as 10%, and operating costs by about 20%.

Project construction would require about 30 months once a positive production decision is made and financing is in place. Also required is a special mining lease from the PNG government. Once this is granted, the government would have the right to acquire up to a 30% participating interest for reimbursement of sunk costs. Another party, Eastern Pacific Mines, also has the right to participate for a 10% interest, subject to reduction from the government’s share. If these rights are exercised, Nord’s stake could be reduced to as low as 22%.

Meanwhile, in New Caledonia (an island off the eastern coast of Australia that is believed to hold 25% of the world’s laterite nickel resources), Calliope Metals (CYO-V) is advancing a feasibility study for an integrated nickel-cobalt mine and refinery at Nakety.

The Australian company has agreed to incorporate a joint-venture company to develop the Nakety deposit and produce nickel and cobalt metal using Dynatec’s pressure acid-leach technology. Calliope is evaluating permitting and environmental matters, as well as financing options, related to the project.

Nakety is reported to contain a measured, indicated and inferred resource of 125 million tonnes grading 1.47% nickel and 0.12% cobalt. Pilot-plant testing by Dynatec has obtained 91% nickel and 87% cobalt recoveries.

The project proposal is based on throughput of 4.2 million tonnes per year to attain production of 34,500 tonnes nickel and 2,700 tonnes cobalt at projected operating costs of less than US$1 per lb. nickel, net of cobalt credits.