Sutton recalculates Kabanga resource

A revised calculation has improved the resource at Sutton Resources’ (VSE) Kabanga nickel project in Tanzania.

Using a nickel cutoff grade of 0.7% and the results of a recent drill program, the resource is now estimated at 21 million tonnes grading 1.66% nickel, 0.23% copper and 0.14% cobalt per tonne. The estimate includes a high-grade resource in the North zone of 8.5 million tonnes grading 2.3% nickel, 0.31% copper and 0.19% cobalt.

The new nickel and cobalt grades are 15% higher than those calculated by BHP Minerals, which held an option to earn a 58% working interest in the property. BHP dropped the project earlier this year, estimating the after-tax rate of return at 11%, based on a nickel price of US$3.30 per lb. and a cobalt price of US$15 per lb.

Using a cutoff grade of 0.5% nickel, BHP estimated the Main zone resource at 19.7 million tonnes grading 1.21% nickel, 0.2% copper and 0.11% cobalt. A resource of 11.25 million tonnes grading 2% nickel, 0.27% copper and 0.15% cobalt was estimated for the North zone.

Both the Main and North zones are considered prospective for underground mining.

Sutton has entered discussions with prospective joint-venture partners for further development of Kabanga and exploration of the Southern Kagera belt.

Meantime, BHP is continuing with exploration work on the northern part of the Kagera Belt, where it maintains an option to earn a 35% working interest by spending US$5 million. BHP can boost its interest in the area to 77.5% by completing a feasibility study.

The Tanzanian government is carried for a 10% interest in both the north and south belt regions.