Nickel giant Inco (N-T) plans to spend US$34 million developing the 1-D Lower orebody at the Thompson mine in Manitoba. The first phase of development is slated to begin in 2006, with first production conceivably to follow in 2008.
“We see the 1-D Lower project as an excellent opportunity to increase low-cost production from our existing operations in a nickel market that we believe will remain robust for some time to come. It is also an important step towards extending the productive life of our Manitoba operations and maintaining them as a vibrant part of Inco’s world for many years to come,” said Inco president Peter Jones in a prepared statement.
The development decision comes amid labour talks between Inco and production workers at the operation. The current labor pact expires on Sept. 15.
Development of the orebody is also expected to provide access to previously drilled exploration targets that will be reassessed using more advanced technology.
Inco expects production from the 1-D Lower orebody, along with nickel concentrate from the Voisey’s Bay project in northern Labrador to significantly improve the Manitoba operation’s cost structure in 2006, as both will decrease the need to source external feed.
At the end of 2004, Inco’s Manitoba operations had measured and indicated resource totalling 27 million tonnes averaging 2.1% nickel and 0.14% copper. Measured and indicated resources were 4 million tonnes running 2.42% nickel and 0.15% copper. Another 3 million tonnes of inferred material runs 1.8% nickel and 0.1% copper.
The Manitoba operations produced a record 53,000 tonnes of finished nickel during 2004.
Bigger bite of Skye
In other news, Inco has boosted its stake in Vancouver-based junior Skye Resources (SKR-V), acquiring an additional 500,000 shares to bring its holding to nearly 2.9 million shares. Assuming the exercise of another 250,000 existing warrants, Inco would own a 13.3% stake in Skye.
Inco initially took a position in Skye in 2004 when the major transferred its 70% interest in the Fenix (then known as Exmibal) nickel-laterite project in the Lake Izabal region of Guatemala.
Skye is in the midst of a five-year option period during which it will examine the feasibility of mining 20,600 tonnes of nickel annually, as ferronickel, with the option of doubling production via atmospheric-pressure acid-leach processing to treat limonitic material (T.N.M., Apr. 11-17/05).
The junior has a 300-kg-per-day pilot plant program underway aimed at testing its proprietary atmospheric-leach process. The test work is slated for completion in November.
Skye’s process is designed to recover nickel and cobalt from both limonite and saprolite nickel laterites at normal pressures, rather than at the high pressures of sometimes temperamental pressurized acid-leach (PAL) technologies.
Initial test results have prompted the company to file for U.S. and international non-provisional patents.
The company says the technology could significantly reduce the capital cost and complexity of processing nickel laterites. Talks aimed at setting up further demonstration plants with major nickel producers are ongoing.
Meanwhile, Hatch is working on a feasibility study considering the production of ferronickel via conventional technology. The plan would see Inco’s existing ferronickel plant refurbished to produce around 11,300 tonnes of nickel annually, with an eventual expansion to double production. The study is due in the second quarter of 2006.
Power for project will either be generated with an on-site, coal-fired power plant, or be supplied from the Guatemalan grid.
At last count, Fenix was home to measured and indicated resource totalling 63.3 million tonnes of saprolite grading 1.84% nickel, plus 57.5 million tonnes grading 1.66% nickel in the inferred category. Inferred limonite resources amounted to 24.5 million tonnes running 1.31% nickel and 0.1% cobalt.
An updated resource figure is expected in the first quarter of 2006. It will utilize up to 45,000 metres worth of drilling planned for an ongoing drill campaign. So far, 300 holes totalling more than 8,000 metres have been completed. Drilling will continue until early 2006.
Work also continues on an environmental and social impact assessment.
To exercises its option on the project, Skye would need to pay Inco another US$3.5 million in cash accompanied by enough shares to raise Inco’s stake to17.5%.
Finish nickel
Meanwhile, in Finland, Inco has inked a three-year nickel alliance with Australian-listed Dragon Mining. Under the agreement, Inco will fund 50,000 euros worth of project generation in the first year and 30,000 euros in each of the two subsequent years. Inco can then take a 50% interest in any identified project by spending another US$500,000.
Dragon subsidiary Polar Mining will manage the exploration until the first US$2 million has been spent on each project.
“The alliance agreement excludes tenements and some adjacent lands already held by Inco in northern Lapland and areas in the Kuhmo-Suomussalmi greenstone belt subject of a previous agreement between Dragon and Vulcan Resources,” said Dragon CEO James Searle in a prepared statement.
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