MBMI closes in on shipping Philippine nickel

Vancouver — After almost three years of raising money and acquiring permits, MBMI Resources (MBR-V, MBRTF-O) is weeks away from shipping its first nickel ore from the Philippines to Asian markets.

MBMI jointly owns four nickel-laterite projects in Palawan, the smaller of the two major islands that make up the Philippines, as well as four additional nickel projects on the main island, in the eastern Samar province.

It is one of the Palawan sites — the Alpha project, situated at the midpoint of the narrow island — that is close to production. “Our objective is to be shipping by the end of this month,” says David Tafel, vice-president of corporate development and an MBMI director. “It’s tough to put an exact day on it because monsoon season is coming soon, so that’s really going to slow things down if everything gets really wet. But I would say by June 30.”

Investors jumped on the nascent producer, driving MBMI’s share price up 35% in two days to $4.60. The price hovered around 75 in 2006 and early 2007, but started to climb quickly in April on the news the company had acquired permits to start developing the Alpha site.

Narra Nickel, MBMI’s subsidiary owner of the Alpha site, has arranged to sell the initial nickel stocks to several major Asian consumers, including Korean steel giant Posco of Korea and Chinese steel producer Zhejiang Huaguang Smelting Group.

MBMI came into the site in mid-2005 through an agreement with Palawan Alpha South Resource Development wherein MBMI earned a 60% interest in the property for US$220,000 plus exploration costs through to production. The company kept costs to a minimum by developing the site for shipping raw nickel ore direct to Asian markets. Raw nickel ore can be suitable for direct shipment if it is saprolite grading greater than 2% nickel or mixed saprolite and laterite grading at least 1.5% nickel.

And efforts truly have been focused on that goal — the company has not completed a National Instrument 43-101-compliant resource estimate or an economic feasibility study. Consulting geologist Steve Goertz wrote in his geological assessment and technical evaluation of the project that the target deposit hosts about 8 million tonnes grading at least 2% nickel saprolitic material, based on historical exploration data and current testing.

A drilling program is currently under way to better define the deposit.

“We have a number of drills on the property right now,” Tafel says. “I would say that the resource estimate should come out some time this fall. Because capital costs are so low with bringing this project into production, the priority is to start shipping raw material, to take advantage of nickel prices.”

MBMI moved quickly to secure that advantage. In late 2005, the company applied for small-scale mining permits for its Alpha and Bethlehem sites on Palawan, which are granted in the Philippines through local authorities. Such permits can be obtained relatively quickly if the local community supports the proposed mine.

Authorities granted the small-scale permit for Alpha in September 2006.

“Those permits allowed us to start building a lot of the infrastructure necessary to pull this off — office complexes and causeways and shipping facilities,” Tafel says.

However, development was slowed because the small-scale permits did not allow logging, which blocked development of a road into the site. That became possible in April, when MBMI was granted full mining and environmental permits for the site.

The small-scale permit was key to developing the Alpha site quickly, and MBMI worked hard to win the support of the local community. As part of that, the company has built a large tree and plant nursery beside the Alpha site.

“The objective is to utilize the seedlings for reforestation and for remediation once the mining process is complete,” Tafel says. “We’re also putting on seminars for local farmers and giving away plants that can be used as cash crops in order to enhance the economic viability of the area. Mining companies have to give back to the community in order to be able to exploit land and mineral products.”

The nursery will serve all eight of MBMI’s Philippine sites. None of the other locations have permits — small or full-scale — as yet, but Tafel is hopeful another project could be up and running soon.

“We’re still a fairly small company, and you can only spread yourself so thin,” he says. “But I believe we will be far enough ahead that we should have another project shipping by the end of the year.”