Weda Bay advances Halmahera (June 25, 2001)

Vancouver-based Weda Bay Minerals (WDA-T) has tabled a positive prefeasibility study at its laterite nickel-cobalt deposits on the Indonesian island of Halmahera.

The study, completed by Kvaerner Process (Australia) and Hatch Associates, concludes that the project is robust at varying capital costs and production levels. The base-case proposes 48,500 tonnes nickel and 4,600 tonnes cobalt over 20 years.

The study envisions peak production occurring in years three to five, in each of which 52,600 tonnes nickel and 5,1000 cobalt would be produced. Operating costs, exclusive of cobalt credits, are pegged at US97 per lb. nickel.

At last report, indicated resources were pegged at 133.4 million dry tonnes grading 1.4% nickel and 0.1% cobalt. Also, 70 million tonnes at 1.29% nickel and 0.14% cobalt are classified as inferred.

The resource is divided among 11 deposits: Santa Monica, Area 2, Uniuni Hill, Tarzan Hill, Sake River, Sake River West, Lipe River, Jira River, Casuarina, Orchid and Big Kahuna. Santa Monica is the largest, with an indicated resource of 66 million tonnes grading 1.4% nickel and 0.09% cobalt.

Santa Monica’s resource is based on 2,625 metres of diamond drilling in 174 holes. An upper, limonitic portion carries 41 million tonnes, averaging 1.2% nickel and 0.16% cobalt with a magnesium oxide content of 4.5%.

Additional resources are expected to be found east of Santa Monica. For instance, 20 holes recently sunk in the Pintu area suggest it is 1.5 times as large as the area enclosing Santa Monica.

With one exception, all of the new holes intersected mineralization. Nickel values varied from 0.87% to 1.77%, and cobalt, from 0.06% to 0.22%, over 1.1 to 12 metres. The widest section averaged 1.49% nickel and 0.22% cobalt, whereas the narrowest averaged 0.97% nickel and 0.16% cobalt.

Weda Bay and OMG Group (OMG-N), which holds a 19.9% interest in the junior and is funding the project, believe further work is required before a bankable feasibility study can begin. Accordingly, resource drilling and metallurgical tests will continue for six months, postponing until June the completion date for the feasibility study.

Weda Bay plans to issue more than 25 million new shares, double the number currently issued. Also, following completion of the feasibility study, OMG can force Weda Bay to repay the loan with 12.7 million shares. Another 5.7 million shares are tied up in warrants, options or escrow accounts.