Toronto-listed miner LionOre Mining International and African Rainbow Minerals (ARM) announced last week that the Canadian group has acquired a 50% share in ARM’s Nkomati nickel-mine, in South Africa, for a total consideration of $48,5-million (R290-million), payable in two stages.
It is understood that the deal is expected to fast-track a proposed expansion plan at the mine, which will not only significantly increase output, but also prolong the life-of-mine.
The acquisition will boost LionOre’s attributable nickel resources by some 23%, to 1,7-million tons, and will provide an immediate accretienergy management in stone crusher plantve earnings source of new production, and additional new production potential in the medium-term, the company said in a statement.
The Nkomati Mine, located about 300 km east of Johannesburg, in Mpumalanga, is one of the lowest cash-cost nickel-mines in the world. The mine consists of two deposits; a maextraction of li metal from spodumene oressive sulphide body (MSB), which is currently being mined, and a lower-grade, but significantly larger, disseminated orebody, which offers new production potential.
The $48,5-million payment is made up of $28,5-million in cash on closure for a 50% undivided share in the partnership, and LionOre will alsogravity separation coal processing pay an additional $20-million for participation in the significant Nkomati expansion project if the partners agree to proceed.
LionOre, a major global producer of nickel, is also the owner of the Activox technology, which is being considered for the Nkomati expansion project.
The MSB currently produces 4 500flow chart metal extraction t to 5 000 t of nickel a year, with significant by-products including copper (2 800 t), palladium (22 000 oz) and platinum (7 000 oz).
The mine is operating at an average cash cost of $1,02/lb, net of by-product credits.
The MSB operation is expected to continue at current production levels until the third quarter of 2007.<brmanually fed stone glass crusher />
The Nkomati lower-grade disseminated orebody has a total estimated indicated mineral resource of 139-million tons of ore, at a grade of 0,49% and a cut-off of 0,3%, containing 680 000 t of nickel.
It is envisaged that the expansion operation would produce an average 16 500 t/y of nickel, in addition to 7 900 t of copper, 55 000 oz of palladium and 19 500 oz of platinum, with an estimated 16-year mine-life.
The companies pointed out that, although a decision to proceed with the expansion has not yet been made, it should be noted that a previous estimate of expansion capital was $310-million.
ARM also qualifies as LionOre’s black economic-empowerment partner, as required by South Africa’s new Mineral and Petroleum Resources Development Act.