Managing director Dale Rogers says the US$100 million (R700 million) project has targeted an initial throughput rate of 900 000 tpa, which will produce an eventual 9 000 tpa of contained nickel, but he explains in an exclusive interview with Mining Review Africa that the mill can be upgraded easily.
“Operating costs are relatively cheap, and the metallurgy involves a very simple sulphide flotation circuit,” he points out. “Effectively it is crush, grind, through the flotation cells and the concentrate is produced – and recovery is around 80%, which is good by world standards,” he claims.
Future expansion would depend on the results of Albidon’s ongoing drilling campaign. “Our overall exploration campaign has been intensified, and a total of US$14 million (R100 million) is being spent this year – US$6 million (R43 million) by ourselves (50% of this at Munali itself) and US$8 million (R57 million) by our joint venture partners on other projects,” Rogers reveals. “This is three times the expenditure in 2006.” He adds that there will be no let-up in the exploration drive next year, and at least US$14 million (R100 million) will be spent in 2008.
“The advantage we will have next year is that – having started production – we will have the necessary cash flow to fund the exploration effort ourselves, and the need for assistance from joint venture partners will fall away,” he contends.
FOCUS NOW ON EXECUTION
“But for the moment we are all about construction and execution of the initial project and not immediate expansion,” Rogers insists, “and we are running on time and within budget.” The infrastructure for the operation is excellent. It is close to the capital city (only 60 km south of Lusaka), and has a highway, rail, power and water supplies on hand.
Initial clearing of the site began as far back as September 2006, and procurement of long-lead items has been completed. The construction management contract has been awarded to Minproc and they are on site.
“We finished the box cut earlier this year,” he continues, “and work then started on the decline and tunnel access. We have also cleared the concentrator site and started earthworks, and the construction programme is underway.”
Main elements of the Munali project are: the concentrator – US$36 million (more than R250-million); surface infrastructure – US$14 million (almost R100 million); and mine infrastructure – US$5 million (R35 million).
Albidon has signed an off-take agreement with the Jinchuan Group – China’s leading nickel producer. Jinchuan has provided US$25 million (R175 million) in subordinated debt funding and equity US$5 million (R35 million). Senior debt funding is being provided by the European Investment Bank and Barclays Capital.
Mineral resources for the project have been set at 8 million tonnes at 1.4% Ni and 0.9 g/t PGM, containing 109 000 t of Ni and 223 000 oz of PGM (at a 0.7% Ni cut-off), of which 6.9 Mt at 1.4% NI is classified as an indicated mineral resource.
With underground mining and milling planned at a rate of 900 000 tpa, the initial life of mine till the end of known resources is around 10 years. “But there’s a high probability that we will add to that as we continue exploration,” Rogers contends.
First production is expected on schedule in mid-2008, ramping up to full production by early 2009. Annual production will be 8 500 tpa for the first five years, followed by 9 000 tpa for the second five years. As byproducts, Cu, Co, Pt and Pd will add 15% – 20% to the revenue stream.
“This is a robust, low-cost project,” Rogers points out, “and at today’s nickel prices payback is rapid. So for us it’s about concentrating on execution, construction and delivery of the project,” he emphasises.
VARIOUS OTHER JOINT VENTURES
With Albidon’s exploration activities strongly focused on Munali, non-core exploration has been joint ventured to ensure increased activity while the nickel mine is being developed. There are four other significant exploration joint ventures in Africa. They are with the following companies:
- Zinifex – exploring for zinc, lead and cu-au in Tunisia;
- BHP Billiton – exploring for Ni-PGM at Songea in Tanzania;
- Lonmin – exploring for PGM at Luwumbu in Tanzania; and
- African Energy – exploring for uranium in Zambia.
This joint venture strategy has seen a dramatic increase in exploration spend in 2007.
In Tunisia, joint venture partner Zinifex – one of the world’s largest zinc and lead companies – is focusing primarily on zinc and lead, with a lesser emphasis on Cu-Au. It is spending US$1.3 million (R9 million) on exploration this year and making a cash payment to Albidon of US$250 000 (R1.7 million). If Zinifex elects to continue next year, it can earn 51% of the venture by spending another US$6 million (R42 million) on exploration and making a further cash payment of US$1 million (R7 million).
In Tanzania, Albidon is involved in joint ventures for exploration of the Songea nickel and Luwumbu platinum deposits. JV partners BHP Billiton (Songea) and Goldstream/Lonmin (Luwumbu) are funding aggressive exploration programmes in this emerging mineral province.
Located in south-west Tanzania, the Songea project forms part of the Albidon-BHP Billiton Africa exploration cooperation agreement. BHP Billiton has nominated five prospecting licences, covering 838 sq km, as a target and can proceed to earn a 30% interest in the project by completing expenditure of at least US$5 million (R35 million). Four additional prospecting licences in Albidon’s portfolio are being evaluated in 2007.
Situated in the Livingstone Mountains of southwestern Tanzania, the Luwumbu project is owned 90% by Goldstream Mining NL and 10% by Albidon. Subsequently an agreement was signed whereby Lonmin plc could earn a 70% interest in the project by sole funding a feasibility study on an indicated mineral resource.
Lonmin has completed a diamond drilling programme comprising 28 holes for a total of 10 146 m to evaluate the Nkenja East discovery, and this programme has demonstrated the widespread occurrence of broadly continuous PGM mineralisation.
URANIUM IN ZAMBIA
In Zambia, Albidon and African Energy resources are in a uranium joint venture which has produced highly promising results so far. A resource of 4.8 m lbs of U308 has been declared at Njame, and a new discovery has just been announced 15 km to the north-east at Gwabe. “I am firmly of the opinion,” predicts Rogers, “that they will find more uranium on these leases of ours.”
Finally, Albidon is also active in Botswana, where there is significant potential for economic nickel sulphide mineralisation. The Selebi-Phikwe Project comprises a group of contiguous prospecting licences covering approximately 8 000 km2 in the eastern part of the central district of Botswana.
Albidon geologists have commenced a systematic evaluation of the potential of the southern two-thirds of the Selebi-Phikwe tenement package, and identified two areas for priority follow-up fieldwork in 2007.
The Lipadi Hill prospect in the eastern part of the tenement package was last explored in the 1970s and yielded significant nickel intercepts in drilling and trenching. This area represents a high priority target for follow-up evaluation, geophysical prospecting and, if warranted, further drill testing.
The Sunnyside Shear Zone is a major geological structure located in the southern part of the Selebi- Phikwe tenement package. This zone extends for many tens of kilometres and contains a number of known nickel sulphide occurrences. Albidon intends to evaluate this prospect further with a combination of soil sampling and ground geophysical surveying aimed at identifying drill targets.