LionOre Launches Groundbreaking Integrated Nickel Production Process in Botswana

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Researched by Industrial Info Resources (Sugar Land, Texas). A $620 million nickel refinery project in Botswana in southwestern Africa will allow LionOre (TSX:LIM) (LIM) (Toronto, Canada) to vertically integrate the processing of nickel mined by removing the smelting step. The proprietary Activox process at the Tati mine will handle the process from ore to finished metal. The Activox integrated processing route offers additional value by eliminating matte product transport costs, third party smelter and refining charges, and price participation. It also increases the net back of payable nickel from 73% to 94%.

The approval of the project in the second week of August follows the conclusion of a feasibility study in June and the running of pilot test projects. Over $480 million will be invested in the Activox base metal refinery, Approximately $114 million into a dense media separation plant, which will upgrade the existing Tati concentrator, and $24 million on the installation of power infrastructure for the plant, which will cover the construction of an 80-kilometer, 220 kV transmission line from the Botswana Power Corporation (BPC) (Gaborone) grid at Selibe Phikwe to the Tati mine. A guaranteed supply arrangement and power tariff with BPC will deliver power at a competitive $0.027 per kWh.

LIM has used an assumed long-term nickel market price of $4.35/lb (per pound) in its planning and forecasts Tati Nickel running at a reduced cash cost of $1.69/lb over the life of the project. Using the process also allows the miner to lower cut-off grade to 0.01%, which almost doubles potential annual nickel production at Tati’s feeder mine at Phoenix to around 22,000 tons per annum (tpa) and increases total payable nickel production over the mine’s life by a factor of five to a total of 236,000 tons.

The refinery and tailings facility will be located three kilometers from the main infrastructure at the Phoenix and the 1,500-acre site has been given a 50-year land grant by the state. An agreement has also been reached with the state on fiscal structures, the environmental and social impact, and the provision of water at a rate of 17.4 million liters per day from the Shashe dam.

Detailed engineering will commence immediately and the DMS plant will be completed in mid-2008, the Activox base metals refinery in the third quarter of 2009, with full nickel metal production in operation available at the same time.

The life of the existing operation had been pegged as ending in 2011-2012, but the new plant will extend that to 2016 and with the inclusion of output from the newly announced Selkirk, indicated resource annual production could be optimized and extended to beyond 2026. This would mean that the current base case nickel total production from the project, 54,703 tpa, would rise to 235,808 tpa in 2016 and 466,997 tons in 2026.

Mintek (Johannesburg, South Africa) has conducted metallurgical test work on low-grade disseminated ores from the Selkirk deposit that have demonstrated a 72% overall recovery using an integrated DMS and flotation circ. The combination of the adjacent refinery and high metal recovery rates suggest that the orebody could be economically mined. The utilization of the waste dump and old magnetic separation dumps, together with the possibility of further exploration success could make a significant addition to the returns on the project.

LIM did not include plans for a PGM (platinum group minerals) processing route in the project’s bankable feasibility study (BFS). Costs of a PGM flotation plant and sulfur rich PGM concentrate impoundment facilities have been included in the Activox capital costs but no contribution has been added in at this time. International engineering and project consultant Hatch Engineering is conducting a pre-feasibility study on the PGM process scheduled for completion in the first quarter of 2007. This meets LIM’s overall project timeline.

At the project launch Colin Steyn, president and CEO of LIM, said that it was a defining moment in the company’s history as it embarked on the transformation into a major vertically integrated nickel producer. “The approval to construct a full-scale Activox refinery, a world first at Tati Nickel, is confirmation of the commercial viability of the processing technology which LionOre has been developing over the last nine years.”

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