ALBIDON LIMITED (AIM: ALD / ASX: ALB)
Positive Bankable Feasibility Study for Enterprise Nickel Deposit at Munali Project, Zambia
HIGHLIGHTS
. The Bankable Feasibility Study for the Enterprise Nickel Deposit is complete and indicates positive economics for the project.
. Development of a 900,000 tpa underground mine and concentrator based on the Enterprise Deposit is technically and commercially feasible.
. Initial 10 year mine life at Enterprise, producing up to 9,000 tpa of contained nickel with potential for further increases in project life through exploration success.
. Highly competitive cost structure due to the efficient and low cost mining methods, excellent existing infrastructure and a simple metallurgical flowsheet.
. Direct cash operating costs estimated at $US 2.0 per pound of Ni in concentrate, before by-product credits, smelting and refining charges.
. The project will be low on the cost curve of nickel producers and is regarded as robust.
. Conversion of Enterprise Indicated Resource to Probable Ore Reserve is close to 100%.
. Product offtake negotiations are well advanced and it is anticipated these will be concluded shortly.
. It is intended that the project will be funded by a combination of debt and equity financing and the Company is currently reviewing a number of proposals in this regard.
. The development of the project has been approved by the Board, subject to receipt of environmental approvals, completion of offtake agreement and project funding arrangements.
. Significant exploration upside exists at Munali, with regional nickel prospects showing potential for further success.
Based on the robust economics indicated by the Bankable Feasibility Study ('BFS'), the Company is progressing with the first phase of the Project Implementation including commencement of design and engineering of surface infrastructure, completing power supply contracts and start-up of initial site works following receipt of environmental approvals.
The BFS has advanced rapidly over the past year since approval of a positive Scoping Study in mid 2005. This rate of progress reflects the strong support from the Government of Zambia and the local community, and this cooperation is appreciated by the Company.
Project Description
The Munali Nickel Project is located 60 kilometres south of Lusaka, the capital of Zambia (see Diagram 1, as attached).
The BFS is based solely on the Enterprise Deposit which is located at the southeast corner of the Munali Intrusion (see Diagram 2, as attached). The BFS has not taken into account possible future production from the Inferred Resource portion of the Enterprise Deposit nor any potential future resources in the Voyager and North West target zones which are presently being drilled.
The Enterprise mine will be an underground operation accessed via a shallow (25m deep) 'boxcut' excavation leading to a nominal 5.0m x 5.5m decline at a gradient of 1 in 7, providing access to the ore at 22.5m sublevels.
The planned mine design utilises highly mechanised up-hole benching and long-hole open stope mining methods, resulting in efficient ore extraction and low mining costs. These mining methods allow for mining from the top down which maximises early production of ore.
The ore will be processed through a conventional flotation concentrator, comprising a simple crushing and grinding circuit, rougher, scavenger and cleaner flotation cells, followed by concentrate and tailings thickeners, producing a high grade nickel, copper, cobalt and PGM concentrate for sale to a smelter.
Key Results of the Feasibility Study
Mineral Resources (as announced on 31 May 2006)
8.0 million tonnes @ 1.4% Ni and 0.9 g/t PGM containing 109,000t of Ni and 223,000 ounces of PGM (at a 0.7% Ni cutoff) of which 6.9Mt @ 1.4% Ni is classified as Indicated Mineral Resource. Successful drilling in early 2006 allowed a conversion from Inferred to Indicated of greater than 100% for the Enterprise deposit.
Initial Mining Reserves
From the Indicated Resource at Enterprise, of 6.9 million tonnes, a Probable Reserve has been calculated of 6.7 million tonnes at 1.23% Ni, 0.17% Cu, 0.07% Co, 0.53 g/t Pd and 0.23 g/t Pt.
The Probable Reserve for the Enterprise Deposit contains over 82,000 tonnes of Ni, 11,700 tonnes of Cu, 4,400 tonnes of Co, 114,400 ounces of Pd and 50,380 ounces of Pt.
This equates to a rate of 97.2% for conversion of the Indicated Resource to Probable Ore Reserve tonnage, fully diluted.
Project Life
The current reserve base for Enterprise is sufficient for a 10 year life, including construction. The Enterprise deposit is open down dip and along strike to the north and it is expected that mine life may be extended with further exploration. In addition, infill drilling should upgrade the remaining Inferred Resource to the Indicated category.
Production Rate
Following a ramp up period in 2008 the project is based on a throughput of 900,000 tonnes per annum for the bulk of the mine life. Initially a throughput rate of 750,000 tonnes per annum had been anticipated for the BFS however, as the Enterprise resource has steadily increased in size during 2005 and 2006 the throughput rate was increased to match the expanded resource.
When the project reaches steady state, annual production will comprise approximately 8,600 tonnes of Ni, 1,400 tonnes of Cu, more than 400 tonnes of Co and 15,000 ounces of platinum group metals (PGM) in concentrate per annum.
Capital Costs
The capital costs for the concentrator and infrastructure were compiled by Roche JR. These are summarised as follows:
Concentrator US$ 36 Million
Surface Infrastructure, including TSF1, Concentrate Storage US$ 14 Million
Mine Infrastructure US$ 5 Million
Contingencies US$ 9 Million
Miscellaneous US$ 1 Million
TOTAL US$ 65 Million
(1Tailings Storage Facility).
Cash Operating Costs
Cash operating costs for mining are based on quotes from mining contractors in Zambia; for the concentrator on costs calculated by Roche JR; and internal estimates were used for the administration costs. The average costs per tonne of ore are as follows:
Mining Operating Costs US$ 22.5 / tonne
Concentrator Operating Costs US$ 9.8 / tonne
Mine Administration US$ 3.2 / tonne
The direct cash operating costs for the Project average $US 2.0 per lb of Ni in concentrate. This cost excludes by-product credits, smelting and refining charges (refer to paragraph on "Offtake Negotiations" below). By-product credits are anticipated to be in excess of $US0.4 per lb of Ni in concentrate. This cost profile indicates Munali will be a low cost producer of nickel.
Offtake Negotiations
Negotiations are well advanced with several nickel smelting companies to identify the concentrate offtake arrangement that will be most beneficial to Albidon. It is anticipated that these discussions will be concluded shortly.
Project Funding
It is intended that development of the project will be funded by a combination of debt and equity financing. The Company is currently reviewing a number of proposals with the objective of identifying the optimal funding mix for the project. Expressions of interest have been received from a number of resource banking groups regarding provision of the debt component of the funding, and a shortlist of potential lenders will be prepared in the coming weeks.
Project Implementation
The Board of Directors of Albidon has approved the development of the Munali Nickel Project. An initial development programme and budget has been approved to enable site works to commence as soon as formal approval has been received from the Environmental Council of Zambia.
The indicative schedule for Project Implementation at Enterprise is as follows:
. Commence surface earthworks Q4 2006
. Engineering, design and procurement Q3 2006 to Q2 2007
. Supply - equipment and fabrication Q1 2007 to Q1 2008
. Installation:
o Process plant Q1 2007 to Q2 2008
o Infrastructure Q4 2006 to Q1 2008
o Commissioning Q2 2008.
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the 'JORC Code') sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The information contained in this announcement has been presented in accordance with the JORC Code and references to "Indicated", "Inferred Resources" and "Probable Reserves" are to those terms as defined in the JORC Code.
Information in this report relating to exploration results is based on data compiled by Mr Mike Dunbar, a full time employee of the Mitchell River Group and a consultant to the Company, who is a member of The Australasian Institute of Mining and Metallurgy. Mr Dunbar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person under the 2004 Edition of the Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Dunbar consents to the inclusion of the data in the form and context in which it appears.
Information in this report relating to Mineral Resources or Ore Reserves has been either completed by or reviewed by Mr Paul Payne of Resource Evaluations Ltd. who is a member of The Australasian Institute of Mining and Metallurgy. Mr Payne has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person under the 2004 Edition of the Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Payne consents to the inclusion of the data in the form and context in which it appears.
If you have any queries please contact the Company Secretary, Nicholas Day on +61 8 9389 6300 or email nickd@albidon.com.
Additional information may also be viewed on Albidon's website at www.albidon.com.
Please find attached the full announcement, including location maps and diagrams.
_______________________________________________________
Beth Harris
Account Executive
Parkgreen Communications
1st Floor, Ireland House, 150 New Bond Street, London, W1S 2AQ
t: +44 20 7493 3713 f: +44 20 7491 3936 m: +44 7904 316 163
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