Most of the big new nickel developments around these days are on nickel laterite deposits - relatively plentiful, but difficult to process with few coming on stream without major start-up problems in their complex, and enormously expensive, hydrometallurgical extraction plants.
Thus it is encouraging to see that a large, low grade, open pit project based on mining nickel sulphide ore is now getting well under way in Brazil. The minesite is a hive of activity with pre-stripping already under way on the open pit and earthworks for the process plant foundations being constructed. Major equipment items - notably the primary crusher, SAG mill and ball mill are all due for delivery in the second half of the year with a view to mine start-up in mid 2009 - and with expansion plans over and above the initial project plan already in hand, and a smelter study in process. Project design has been completed and the contractors selected both for plant and mine construction and for the mining operation itself.
The operation concerned is Mirabela Nickel's (ASX: MBN - TSX: MNB) Santa Rita mine 340 km south of Salvador and close to the town of Ipiau with 50,000 inhabitants of whom around half are currently unemployed after the decimation of the local cocoa industry. The company reckons that the Santa Rita deposit is the largest nickel sulphide resource in South America and the largest greenfield nickel sulphide discovery made in the world in the last 12 years. The mine is located close to power and road infrastructure and is supported by the local population in a country which is well disposed towards mining.
The JORC/NI 43-101 resource is currently put at some 84 million tonnes grading 0.61 percent Ni containing over 500,000 tonnes of nickel metal (with some minor, copper, cobalt and gold values), but with the deposit open to the east and at depth the scope for a major increase is considerable. The company's Managing Director, Nick Poll, told Mineweb that they are aiming to prove up over 1 million tonnes of contained nickel from the proposed open pit plus a subsequent underground mining operation, the feasibility of which is being worked on now.
What sets this project apart from some of the admittedly much bigger nickel laterite operations currently under development is that processing via a conventional crush-grind-flotation concentrator is relatively simple and capital costs are far lower. (In this case, though, the metallurgy of the ore suggests that only about 70 percent of the nickel is recoverable.) The total capital cost for bringing Santa Rita to production is put at $322 million, including contingency, to produce 14,000 tonnes of nickel a year in its first stage. Compare this with a capital cost of $3.2 billion for Vale Inco's Goro project to produce 60,000 tonnes of nickel a year - effectively around twice as much per annual tonne of nickel to be mined, or the same company's Onca Puma operation to produce 58,000 tonnes a year of ferronickel where capital cost estimates have recently been escalated to $2.3 billion.
In the same vein, BHP Billiton's big Ravensthorpe nickel laterite operation in Australia is now expecting it will take until 2010 to reach its capacity of 50,000 tonnes f nickel a year after start up last year and the latest costs there escalated to $2.2 billion from an original $1 billion.
Obviously there are still some hurdles to be overcome before Santa Rita starts producing - about $160 million has been spent so far. The balance of the finance needs to be raised and the company is prepared to hedge 20 percent of its production forward to help achieve this. Poll believes they won't have a problem with the finance, which should be in place within the next few months. But then he may have to fight off potential predators keen to secure supplies for the future. However he reckons the majority of the Mirabela stock is tightly held making it difficult for a predator to build a stake.