Privately-owned Consolidated Nickel Mines (CNM) has breathed new life into its Zambia-based Munali nickel mine.
Since its initial commissioning back in 2007 under the previous owners Albidon and subsequently Jinchuan Group, the mine had been plagued by low nickel prices and misunderstood geology.
Having spent four years reviewing the operation since acquiring it in 2015, CNM has devised an entirely new approach to operating the mine which will ensure its profitability and provide it with exposure to increasing nickel prices and new technology demands, CNM co-founder SIMON PURKISS tells LAURA CORNISH.
Munali’s 12-year history has been filled with an array for unfortunate events which has until now not enabled its potential to be fully realised.
The US$180 million mine was first developed in 2007 with the expectation of achieving significant profits on the back of a very high nickel price which went as high as $54 000/t around that time. But the price dropped substantially as the mine was commissioned, forcing it into early retirement.
Diversified resources company and Hong-Kong listed Jinchuan Group International Resources took up ownership of the mine in early 2014 but quickly started encountering sink holes on surface after recommencing mining – the result again of an incorrectly deployed mining method based on inaccurate geological interpretation. With continued low nickel prices, Munali’s fate saw it placed on care and maintenance until CNM commenced start-up operations in Q4, 2018.
New owner, new vision
CNM acquired full operational control of the Munali nickel mine and adjacent exploration area in 2015 through a 10-year lease and royalty agreement with Jinchuan, with an option to extend for a further 10 years.
With substantial experience in the nickel sector, Purkiss, one of the founding members of CNM, recognised the potential Munali had to offer, which is supported by good infrastructure including roads and transport in a mature mining country. The mine is situated 75 km south of Lusaka in Zambia.
“We have spent the last four years extensively re-evaluating the ore body and its existing plant infrastructure,” says Purkiss. The co-founder and his team were fortunate enough to have access to three open levels of the ore body which enabled them to gain a solid understanding of the geological structure. “We were consequently able to design a mining method that complements the ore body which entails a cut-and-fill bulk mining approach.”
The incorporation of a DMS plant and different flotation method further supported extracting better value product from the operation as well.
Although the plant was originally designed to process up to 80 000 tpm, CNM has taken a measured approach to production and is targeting a nameplate capacity of 60 000 tpm or 720 000 tpa for now which it hopes to reach by September this year. “At these production levels we should produce around 5 000 tpa of nickel in concentrate at a grade of 12%,” Purkiss confirms. The mine successfully produced first nickel in Q1 2019 on the back of a small $50 million investment.
And although the production levels only equate to a six-year mine life, Purkiss reveals that the company is already finding more nickel-bearing ore through drilling and adds that the resource is also open at depth. “We have a number of satellite deposits, of which one already has a JORC-compliant resource, so we believe we will likely increase our mine life to between 10 and 15 years.”
The mine itself, accessed via decline, extends 300 m below surface and is as Purkiss describes “a good Australian design”. The mining fleet, on lease from Epiroc, is underground and working using the intended bulk mining, cut-and-fill methodology.
The mine is managed by an all-Zambian management team and currently has a workforce of 380 people, of which 10% are women.
Looking back over the last four years, the re-establishment of Munali has been fairly seamless, although Purkiss admits infrastructure can sometimes be challenging. “Consistent power supply remains one of our regular issues to contend with but we’re looking at alternative power supply options to eliminate that difficulty. Fortunately, at 6 MW, our power consumption is relatively small.”
A bigger plan in play
While the current nickel price, hovering around the $12 000/t is still considered low, there are signs and forecasts that the price is set to increase, north of $15 000/t by early next year. This will be driven by the need for nickel in stainless steel products and supply of pure nickel into the growing electric vehicle market.
To benefit from these markets, CNM is already evaluating the potential of upgrading its nickel sulphide concentrate into a metal and to date is conducting test work to develop a flow sheet and thereafter will move to pilot-scale test the viability. “Producing a nickel metal will also offer the added benefit of reducing our transportation costs,” Purkiss notes.
Looking to the future, Munali’s future seems bright and is set to operate profitably for the first time in its history under CNM. “We have and will continue to put a lot of effort into ensuring our stakeholders recognise that we have built a new age, modern mine that doesn’t fall into the conventional process and mind-set of the copper mines built in Zambia in the 1970s and 1980s,” Purkiss concludes.
Beyond Muanli, CNM will also look to identify and secure other assets to further diversify its portfolio with a potential IPO listing on the cards in late 2019.