Nkomati1

The tailings dam thickener
at Nkomat
i

This follows the completion of Phase 1 of the Nkomati project, which involved commissioning at a cost of R385 million (US$55 million) of a 100 000 tpm concentrator plant with a milling capacity of 1.2Mtpa and a production rate of 5 500 tpa of nickel.

“Now the approval of the Phase 2 expansion cements Nkomati’s long-term future as it unlocks around 1 million tonnes of contained nickel resource, increases milling capacity to 8.5 Mtpa, and quadruples annual nickel production to 20 500 tonnes,” says Norilsk chief executive Peter Breese. “The company is planning to invest R6 billion (US$830 million) in Africa over the next three years to double nickel production and implement the innovative Activox technology,” he reveals.

Nkomati2

The ore silo towers above
surrounding buildings

The Phase 2 expansion project also delivers a powerful boost to the regional Mpumalanga economy through this large direct investment and the creation of new employment opportunities. “The recent successful delivery by the Nkomati project team of the interim plan on time, within budget and with zero lost time injuries bodes well for this project,” Breese points out.

ARM BECOMES LARGER NICKEL PRODUCER
ARM chief executive officer André Wilkens adds that the Phase 2 large-scale mining expansion project takes the company to the next level of becoming a larger producer of nickel at an operational cost which is globally competitive.

The Phase 2 project will exploit two zones of the largelayered, poly-metallic, disseminated sulphide resource, which contains 904 335 tonnes of nickel. First is the Main Mineralised Zone (MMZ) which is currently being mined by the interim phase through underground and open pit mining. This is overlaid by the Peridotite Chromititic Mineralised Zone (PCMZ), which will be mined by open pit mining. In addition to nickel, by-products of PGMs, chromite, copper and cobalt will also be recovered.

Nkomati3

Nkomati mine headgear

Mining will continue from the underground mine, at the rate of 47 000 tonnes per month, and from the development of two new open-pits, Pits 2 and 3, which will produce 578 000 tpm of ore at a steady state of production. The average mill grade for the total project will be in the order of 0.4% nickel, over the life of mine.

The current 100 000tpm concentrator will be upgraded to 250 000tpm to process the PCMZ ore and a new 375 000tpm concentrator for the MMZ ore will be constructed to give an overall concentrator capacity of 625 000tpm. The mine’s related infrastructure will also be upgraded, including construction of two new tailing facilities and an upgrade of the power supply to 80MVA.

CONSTRUCTION BEGINS IN 2008
Construction will commence in early 2008 and is scheduled to take 24 months from the announcement date. Production will be sequenced, targeting initial production ramp-up from the MMZ concentrator during the third quarter of 2009, with full production by first quarter 2010. This will be followed by initial PCMZ production rampup targeted during the third quarter of 2010, with full production by 2011.

Nkomati4

A drill rig drills holes in
preparation for blasting

Average annual nickel production in concentrate is forecast to be 20 500 tonnes over the 18-year life of mine. By-product production is expected to be 9 000 tpa copper and 110 000 ounces pa of PGMs, predominantly palladium.

The Phase 2 expansion will secure 254 jobs and create an additional 330 new jobs, and during construction it will provide employment for some 2 000 contractors. The project assessment was based on a capital cost of R3.2 billion (US$445 million) in May 2007 terms, and an average nickel cash cost forecast of US$3.57/lb.

The project will be funded from Nkomati internal cash flows, and by both partners when required. The release of the project triggers the R140 million (US$20 million) payment by Norilsk Nickel (previously LionOre) to ARM in accordance with the original transaction.

Nkomati5

The crushing plant and
conveyor to the ore silo

Nkomati has already secured toll smelting and refining capacity for its concentrate. Meanwhile a bankable feasibility study (BFS) will be carried out during 2008 to examine the viability of constructing an Activox refinery for Nkomati.

This would become Phase 3 of the Nkomati operation, and would involve the construction of a R4.5 billion (US$65 million) Activox plant similar to Norilsk’s first one at Tati Nickel in Botswana. If the BFS leads to a decision to go ahead, it would mean that the full 22 500 tpa of contained nickel produced at Nkomati would be processed by the new refinery.