Highlands Pacific Signs with China's MCC to Develop $650 Million Papua New Guinea Nickel/Cobalt Project

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The Ramu nickel and cobalt mining project in Papua New Guinea (PNG) is now on the move with the signing by Australia's Highlands Pacific Limited (Sydney:HIG) (Port Moresby, PNG/Brisbane, Australia) of a 'master' agreement with the developer China Metallurgical Construction Corporation. HIG is partnered by the Papuan government-owned Mineral Resources Development Corporation (MCC) (Beijing, China).

The updated feasibility study on the project has been based on the production of 32,800 tpa of nickel and 3,200 tpa cobalt, either as metal or contained in a high-grade intermediate high-grade product for sale to a smelter-refiner. A mineable reserve of 75.5 million tons was established for the study. This accounts for about half the identified resource base. The global resource at Ramu is currently 143.2 million tons grading 1.01% nickel and 0.10% cobalt reported at 0.5% nickel cut-off.

The actual life of the mine is expected to extend to 35 to 40 years and beyond the initial 20 years, as substantial exploration upside exists. The Ramu laterite ore is almost identical in type and character to the Moa Bay, Cuba, deposit where acid pressure leaching has been used successfully for 40 years. The upgraded ore will be pumped as slurry through a 134-kilometer pipeline to a refinery located at Basamuk Bay on the country's Rai coast.

The agreement, signed at the end of March, gives MCC 180 days to establish a corporate presence in PNG before it can enter into a formal joint venture (JV) agreement, for which the terms have already been negotiated by the partners. HIG Managing Director, Ian Holberger, said that the plan is to have finance in place in nine to twelve months and a start to construction in eighteen months.

Under the terms of the JV, MCC will have the right to 85% of the $650 million project's equity by taking the project through to construction and funding development. Highland Pacific's Ramu Nickel will retain 8.56%, which will increase to 11.3%, once the debt is repaid. HIG then has the right to buy up to 20.55% at market value. Operating costs for the life of mining are forecasted to be in the lowest 10% of the world nickel cost curve.

Ramu ranks as one of China's largest offshore resources investment projects. Local officials welcome the use of Chinese capital and know-how to get the country's commercial resource exploitation back on a sold growth path.

HIG is active in a number of resource projects in PNG. These include the Kainantu high-grade gold project, where production is scheduled to begin towards the middle of this year, and the world class Frieda River and gold porphyry project. This is at the pre-feasibility stage. Noranda (TSX:NRD) (Toronto, Ontario) can earn a 72% interest in this project by funding HIG's expenditure to the commitment-to-development stage. HIG is also involved in other gold and copper exploration activities in PNG.

HIG's share of current resource base identified in its projects is: 13.6 million ounces gold; 2.2 billion pounds nickel; 216 million pounds cobalt, and 14 billion pounds copper.

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