Emily Ann takes shape under LionOre

Development work is proceeding on schedule at the Emily Ann underground nickel-copper project in Western Australia.

In December 2000, LionOre Nickel, the 70%-owned Aussie subsidiary of LionOre Mining International (LIM-T), announced it was earmarking A$25 million for construction of a concentrate-treatment plant and A$17 million for mine development and surface structures.

Funding has been arranged by NM Rothschild & Sons and Inco (N-T). The latter needed to pin down a new source of nickel feed after it became clear that its Voisey’s Bay project in Labrador would be delayed for years.

Emily Ann will use a conventional, on-site nickel-sulphide concentrate plant to process 250,000 tonnes of ore annually, containing an average of 6,700 tonnes of payable nickel.

Production is to begin in the fourth quarter, with concentrate shipped to Inco’s Canadian smelters under a life-of-mine, off-take agreement signed in December 2000.

Situated 540 km east of Perth in the Lake Johnston greenstone belt, the Emily Ann deposit contains a probable reserve of 1.2 million tonnes grading 3.4% nickel plus indicated and inferred resources of 2.1 million tonnes grading 3.98% nickel.

The agreement with Inco further allows LionOre Nickel to include its share of any nickel concentrate produced from the company’s 31% stake in the neighbouring Maggie Hays deposit. Australian-based QNI, a subsidiary of Billiton, holds the remaining stake in that deposit.

Elsewhere in Australia, at the Thunderbox gold deposit owned by LionOre (60%) and Australian junior Dalrymple Resources (40%), a bankable feasibility study is expected to be completed soon.

So far, the partners have delineated a resource of 30 million tonnes grading 2.2 grams gold per tonne, or 2.1 million contained ounces.

Further exploration by LionOre at various joint-venture projects in the Wildara region is continuing, and the company says it is encouraged by recent results close to Thunderbox.

At the Tati nickel operations, in Botswana, the ongoing US$66-million expansion of the Phoenix mine remains on budget and on schedule for completion early next year.

A new wet concentrator will enable annual throughput to be boosted to 3.6 million tonnes, effectively doubling production to around 12,500 tonnes of payable nickel per year.

The mining plan for the Phoenix pit is also being reviewed, in light of additional drilling carried out in 2000.

Tati is owned by Anglo American (AAUK-Q), with 43.35%, LionOre, with 41.65%, and the government of Botswana, with 15%.

LionOre’s attributable share of after-tax profits from the Tati operation amounted to $2.3 million in the recent quarter, compared with $2.6 million in the first three months of 2000.

Tati’s cash operating costs fell to just $1.36 per lb. nickel for the quarter, compared with an average of $1.44 per lb. for all of 2000.

Overall, in the first quarter of 2001, LionOre earned US$1.4 million (or US1 per share) on revenue of US$2.6 million, compared with the US$3.7 million (US3 per share) on US$2.8 million in the corresponding period last year, when nickel prices were higher and the company gained US$3 million from sale of marketable securities.

LionOre has enlisted Haywood Securities to help it raise up to C$12 million by privately placing special warrants. Each special warrant will be priced at C$1,000 and be convertible into a unit consisting of 110 share-purchase warrants (or 150 warrants under certain conditions) and C$1,000 of debentures with a term of three years and a 12% coupon. Each warrant will allow the holder to buy another share for C$2 over three years.

Recent appointments include Donald Bailey as chairman of LionOre, and Gilbert Playford as vice-chairman. Colin Steyn remains president and chief executive officer.