Mindoro working to expand Agata nickel project

Vancouver – Philippines-focused junior Mindoro Resources (MIO-V) continues to advance its Agata nickel project in the country with an updated resource and prefeasibility study in the works.

The company recently released results from drilling just south of its Agata nickel project in the northeast part of the island of Mindanao, while in mid-May it released results from a second nickel target further north and from its Pan de Azucar copper-gold target on the island of Panay.

At Agata South, sitting several km south of the established Agata resource, Mindoro drilled just over 7,000 metres in 645 holes as part of a 10,000-metre drill program in the area. Results from the shallow laterite drilling include numerous intervals around 10 to 15 metres thick and grading around 1% nickel, with some hitting shorter intervals grading almost 50% iron.

Hole ASL-3 hit 17.1 metres grading 1.02% nickel, hole ASL-4 cut 10.5 metres averaging 1.06% nickel and hole ASL-10 returned 1.07% nickel, all from surface.

The company’s drilling at the Bolobolo target further north returned slightly higher nickel grades, including 13.8 metres grading 1.36% nickel, 12.1 metres averaging 1.12% nickel and 15 metres carrying 1.03% nickel, again from surface.

At Bolobolo, Mindoro completed 5,200 metres of drilling in just under 500 holes out of a planned 7,000- to 10,000-metre program. Once drilling is completed at Agata South the company plans to return to northern targets such as San Jose and Bolobolo.

The company plans to work the drilling into an updated resource estimate, with a target of getting it out sometime in this third quarter. Mindoro is also looking to release a thermal upgrade scoping study for the Agata project this quarter to improve the margins over direct shipping.

Mindoro released a preliminary economic assessment in late March that evaluated both a direct shipping option and a high-pressure acid leach option. Direct shipping showed to have low margins and it is looking likely that the country will join others in banning the practice in the future, so Mindoro is focusing on the more value-added options shown in the assessment.

Using a combination of high-pressure acid leaching, atmospheric agitated tank leaching and saprolite neutralization, the PEA established the possibility of processing 1.8 million tonnes of material to produce 18,000 tonnes of nickel per year after ramp up. With a resource of 26.1 million tonnes grading 1.05% nickel, 0.06% cobalt, 24% iron and 11.2% magnesium, the study estimated a 15 year mine life.

The study estimated capital costs of US$906 million and a cash operating cost of US$2.61 per lb. nickel without credits or a possible US$1.65 per lb. with cobalt and electrical credits from the acid plant.

Those numbers work out to a cash flow of US$173-million per year, a net present value, with a 10% discount, of US$390 million and an internal rate of return of 19%, all after-tax. The study used US$10 per lb. nickel as a base, while the price has ranged from a low of around US$8.50 per lb. to a high of over US$13 per lb. in the past year.

The Philippines Mines and Geosciences Bureau released a study on July 4, in which Mindoro participated, that highlighted the country’s potential to supply nickel concentrate to China’s steel industry from high-iron, low nickel laterite ores through sintering.

Mindoro is targeting the fourth quarter for a pre-feasibility study on Agata, while also planning a second resource upgrade in that quarter.

The company controls over 260-sq.-km of the western nickel laterite belt in the Surigao region of Mindanao. The primary Agata project was long-ago deforested and sits very close to the ocean.

Mindoro’s share price closed unchanged at 18¢ on the day the latest results were released. The company has roughly 230 million shares outstanding and about $8 million in the bank.