Listed on the Toronto, London, Australian and Botswana stock exchanges, LionOre is an international nickel concentrate producer with operations in South Africa, Botswana and Western Australia. It has been the subject of a US$6.8 billion (close to R48 billion) bid from Norilsk.
“The two LionOre nickel processing growth projects in Botswana will continue under the Norilsk mantle at a cost of US$620 million (almost R4.5 billion),” says group chief operating officer Peter Breese in an exclusive interview with Mining Review Africa, “an initiative which is comfortably the biggest ever single investment in the southern African region.” They are at Tati Nickel, 30 km east of Francistown in the north-east of the country.
Looking first at the new dense media separation (DMS) plant, it will have a throughput of 12 Mtpa. It will separate and discard 7 Mtpa, and the other 5Mtpa of upgraded product will flow into the milling se ction.
“This is not additional to the current 5 Mtpa throughput,” Breese explains. “Introducing DMS simply gives you double the number of nickel units that go into the concentrate – so you produce double the amount of concentrate. You don’t have to expand or replace mills because you keep the milling capacity the same, and because you produce more nickel units in the end, you improve your offering,” he contends.
He reiterates that the start-up target for the DMS plant – which is costing US$114 million (R800 million) – is mid-2008, and confirms that everything is on schedule at this stage.
“By that time we have to be able to mine and feed more ore to the DMS plant,” Breese says, “and that means more concentrate, so we have to upgrade our concentrate handling facility to handle the increased volume. This is all in hand, and when the DMS plant is commissioned next year we will be mining more ore and we will be ready to process more concentrate,” he continues.
“We are currently mining at a rate of 25 Mtpa, but by this time next year when the new plant is running our throughput will have increased by close to 50% to a total of 36 Mtpa,” Breese reveals. “Of that 36 m tonnes about 12 m will go through the DMS plant, and of that 12 m tonnes only 5 m will eventually be milled after the upgrade through separation,” he adds.
Life of mine at Tati Nickel’s Phoenix open pit nickel mine was announced last year as 10 years to 2016. “But this is an open-ended ore body, and we are still drilling and adding to the resource,” Breese explains. “We do not know how much this will add to mine life, but it should be a couple of years at least,” he estimates.
In addition, he points out that the second ore-body at Tati – called the Selkirk deposit – could extend mine life to 2030. A feasibility study on this deposit is scheduled for completion by the end of the year. Initial capex for this project will be in the vicinity of US$160 million (more than R1.1 billion).
The second LionOre growth project at Tati Nickel, after the successful operation of the Activox® demonstration plant, is the construction of a full-scale refinery at the Botswana Metal Refinery (BMR) at a cost of US$482 million (almost R3.5 billion). Activox is LionOre’s proprietary, environmentally friendly, hydro-metallurgical technology which replaces the need for conventional smelting and offers improved metal recovery rates. “It will be the world’s first.
Activox refinery, and will transform Tati Nickel into a vertically integrated operation, producing from rock to finished metal,” managing director African operations Gerhard Potgieter reveals. By combining Activox with the ore upgrading DMS technology, the Phoenix mine at Tati is able to increase its annual nickel production by 97% to 22 500 tonnes of refined nickel, reduce its cash costs and increase the life of mine by at least an additional five years.
“Total life of mine production is estimated at this stage at almost 236 000 tonnes, and it will also produce 18 000 tpa of refined copper,” Potgieter reveals.
“As far as progress is concerned,” he continues, “we are six months into a 2.5-year construction cycle. Everything is progressing as expected, and we are making good time,” he informs.
The 1 km-by-1 km site has been cleared, earthworks are well advanced, construction has started on the required water pipeline, the camp to accommodate 3 000 workers is ready, and engineering is progressing well. DRA is well into construction of the DMS plant, and Hatch Africa – the contractors for the refinery – already have 200 people on their full time team working out of Johannesburg, Brisbane and Toronto.
“We are currently awarding the civil contracts, which will bring in the first wave of workers in the next month or two,” Potgieter points out. “Once all the mechanical construction starts in early 2008 the 3 000-man camp will be filled,” he adds.
A third element of the growth at Tati Nickel is the provision of the required power supply. “We are financing the construction of 80 km of power lines and the associated sub-stations at a cost of US$25 million (R175 million),” he says. “Work is already well underway, and the switch-on is scheduled for Q1 of 2008.”
Moving from Botswana to South Africa, Breese confirms that LionOre – in conjunction with its 50% joint venture partner ARM Platinum – is planning a three-phase expansion culminating in a spend of US$650 million (R4.5 billion) on an Activox plant similar to Tati. It will be located at the Nkomati nickel and PGM mine in the Machadadorp area of Mpumulanga, 300 km east of Johannesburg.
Phase One of the Nkomati project involved commissioning of a 100 000 tpm concentrator plant at a cost of US$55 million (R385 million) which has a milling capacity of 1.2 Mtpa and produces at a rate of 5 000 tpa of nickel.
“The feasibility study for Phase Two has been completed,” Potgieter adds, and an announcement on the go-ahead was scheduled as we went to press. This development – which anticipates capital expenditure of US$500 million (R3.5 billion) – will increase milling capacity to 8.5 Mtpa, producing some 22 000 tpa of nickel in concentrate.
“Phase Three,” says Potgieter, “involves the construction of a US$65 million (R4.5 billion) Activox plant similar to our first one at Tati Nickel, which means that the full 22 000 tpa of contained nickel produced at Nkomati will be processed by our own refinery. “But it is still early days. We are working from the basic Tati model,” he concludes, “but all the feasibility and other preparatory work still has to be done.”