Falconbridge OKs Nickel Rim South

Falconbridge (FL-T) has approved a US$368-million program of definition drilling underground at its Nickel Rim South deposit in Sudbury, Ont.

The program is expected to last five years and will begin immediately. Expenditures for 2004 are pegged at US$75 million.

Inferred resources at Nickel Rim South stand at 13.2 million tonnes grading 1.7% nickel, 3.5% copper and 0.04% cobalt, plus 0.8 gram gold per tonne and platinum group element credits. The resource boundaries remain open, and surface drilling is expected to wrap up by the fall.

Falco says the cost of bringing a mine into production following underground drilling would be US$185 million. Initial production is expected in 2008. Net of US$141 million worth of projected preproduction revenues, the overall net capital cost is pegged at US$413 million.

The pretax internal rate of return is expected to be 40%, based on a nickel price of US$3.25 per lb. and a copper price of US90 per lb. Operating cash costs are estimated at minus US66 per lb. of nickel, owing to byproduct credits.

“The addition of a large, high-grade inferred resource such as Nickel Rim South has dramatically changed our resource profile in Sudbury,” says President Aaron Regent. “Combined with our recent discovery of the Fraser Morgan deposit, we now have a resource base that will allow us to operate in Sudbury for at least the next twenty years.”