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The proposed mines would help satisfy European and Asian demand for stainless steel. Prices for nickel and chromium have surged in response to the economic boom in China. The metals are used as alloys in stainless steel, which must contain a minimum of 10.5% chromium. Nickel is used as an alloy to enhance ductility and prevent corrosion, while chrome provides additional resistance and decorative appeal.
Both projects are in established mining regions with good road and rail access, power supplies, and nearby coal deposits, which could keep the furnaces running.
Oriel has a 90% vested interest in Shevchenko, its key nickel project. Shevenko contains nickel silicates in an ultramafic complex rising as hills above the surrounding plains. The nickel-laterite deposits contain 79 million dry tonnes averaging 0.92% nickel.
According to an independent estimate, four of the deposits that comprise Shevchenko contain 34.3 million tonnes grading 1.02% nickel in the measured and indicated resource categories. Almost 12 million tonnes grading 0.97% nickel are inferred. The final measured and indicated resource should be sufficient to sustain mining over 25 years, Oriel says.
The success of the project hinges on the pyrometallurgical process used to produce ferronickel. Toward that end, Oriel recently achieved its targeted 90% nickel recovery in the pilot plant.
The test engaged South African-based Mintek’s twin electrode DC arc furnace to smelt a bulk sample. Lateritic ore weighing 188 tonnes derived from three of Shevchenko’s deposits was subjected to power levels of up to 1.5 MW, which produced 11.5 tonnes of ferronickel alloy.
Preliminary results indicate that Shevchenko material grading 1.4% nickel will produce an alloy grading 22% nickel at a recovery of 89% and an average operating cost below US$1.53 per lb.
South African-based engineering firm Bateman Metals, which is carrying out a feasibility study, confirms that the recent metallurgical results warrant proceeding with the planned furnace design. The feasibility, to be completed by the third quarter, will consider annual production of 31,000 tonnes of nickel from 140,000 tonnes of ferronickel.
The project is estimated to cost US$346 million. Its net present value, discounted at 10%, is pegged at US$489 million before taxes and royalties. Production could begin in 2008, provided financing can be arranged.
The company has wasted no time in signing offtake agreements, having inked a letter of intent with German-based
Feasibililty work is also under way at the Voskhod chrome project. Voskhod is hosted in the Kempirsayskiy massif, which contains at least 80 other chromium deposits, including the large Donskoy GOK mine of KazChrome.
The deposit exists at depths of 100-400 metres and will be mined by underground methods. The Soviets had estimated 18.7 million tonnes grading 46.2% Cr2O3.
A scoping study, now under way, entails 5,000 metres of drilling by Oriel, mine design, resource calculation and environmental tests by engineering firm SRK, and metallurgical tests by Mintek.
Oriel is in talks with industry representatives in Russia and China regarding potential offtake agreements, and is deciding whether to sell the chromite directly or produce ferrochrome on site.
Russian-born Sergey Kurzin, Oriel’s chairman, is no stranger to the mining industry in the former U.S.S.R. In the 1990s, he facilitated
Oriel also has a strong technical team, including Nic Barcza, CEO of Mintek’s gold and ferroalloy division, who has more than 25 years of experience in the ferroalloy and stainless steel industries.
Oriel has a new Toronto Stock Exchange listing, in addition to its Alternative Investment Market listing in London. Shares recently traded at 86, giving the company a market capitalization of $172 million.
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