Chinese company goes ahead with Nunavik nickel mine

Construction of the Nunavik nickel project is back on track with a start up goal of early 2012 now that Jien Canada Mining, a subsidiary of China’s Jilin Jien Nickel Industry Company has approved a $122.4 million budget for this year.

Vancouver-based Goldbrook Ventures (GBK-V) has a 25% interest in Jien Canada Mining (the operator) while Jilin Jien holds 75%.

Costs and other numbers haven’t been finalized yet because Jien Canada is waiting for an updated feasibility study that will be based on a 2007 study completed by former project owner Canadian Royalties. Jien Canada acquired the project in 2009 for about $192 million from Canadian Royalties after winning a hostile takeover battle.

“Going by the Canadian Royalties feasibility study we know the project is in the $500 million-plus range,” says Goldbrook president and chief operating officer, Brian Grant. “We are not expecting a lot of difference but there could be some changes that affect pricing.”

One of those changes is Jien Canada is planning to build a mill with a 4,500-tonne-per-day capacity, up from the original 3,500-tonne-per-day mill.

“We’ve already started process to apply for the additional permits for that,” Grant says.
Jien Canada is still working out the details for a port to ship concentrate to smelters. Grant says there have been some discussions with Xstrata (XTA-L, XSRAF-O) subsidiary, Xstrata Nickel, which ships concentrate from its nearby Raglan nickel mine from Deception Bay, but the understanding right now is that Xstrata’s port isn’t big enough for both.

“The obvious thing is we would have to build a separate facility right next to Xstrata’s with a dock site and storage,” Grant says. “We are looking at commissioning the mill in early 2012 so I imagine the port facility will be addressed over the next few months and major construction would be done next summer.”

SNC Lavalin is the contractor in charge and is in the process of updating the feasibility study. Grant says it should be ready in September.

The earlier feasibility study said the deposit could produce 26 million lbs. nickel in concentrate, 38.8 million lbs. copper in concentrate, 900,000 lbs. cobalt in concentrate, 14,500 oz. platinum and 78,600 oz. palladium per year over nine years with the potential to double the mine life.

During this construction season will include constructing fuel storage, personnel accommodations, roadwork, pre-stripping the Expo and Mesamax deposits to generate construction material, the Bombardier dam site, concrete foundations for the mill site, structural steel erection and engineering studies.

The Nunavik Nickel project has measured resources of 560,000 tonnes grading 0.93% nickel, 1.1% copper, 0.04% cobalt, 0.6 gram platinum, 2.66 grams palladium and 0.1 gram gold per tonne.

Indicated resources stand at 21.3 million tonnes grading 0.93% nickel, 1.15% copper, 0.054% cobalt, 0.54 gram platinum, 2.17 grams palladium and 0.14 gram gold per tonne.
There are also inferred resources of 5.2 million tonnes grading 0.73% nickel and 0.92% copper plus cobalt and platinum group metals.

Resources are found in five deposits: Allammaq, Expo, Ivakkak, Mequillon, Mesamax and Puimajuq.

Jien Canada mining is funding the entire project. Goldbrook will be required to pay for its 25% once the project is cash flow positive.

Goldbrook also announced that Canadian Royalties former directors and certain current and former officers have been named as defendants in a securities class action lawsuit file in the Ontario Superior Court of Justice. Jien Canada has also been named as a defendant and the lawsuit seeks a declaration that it be bound by the court’s findings.

Goldbrook notes that Jien Canada Mining wasn’t an owner of Canadian Royalties during the time period specified in the lawsuit complaint. The complaint alleges that the defendants made material misrepresentations about Canadian Royalties’ operations and prospects in various public statements and filings between June 21, 2007- Aug. 5. 2008.