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 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 farther north from its Pan de Azucar copper-gold target on the island of Panay.
At Agata South, sitting several kilometres 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 drilling into shallow laterite include many intervals 10 to 15 metres thick at 1% nickel, with some hitting shorter intervals at almost 50% iron.
Hole 3 hit 17 metres at 1.02% nickel, hole 4 cut 11 metres averaging 1.06% nickel and hole 10 returned 1.07% nickel, all from surface.
The company’s drilling at the Bolobolo target farther north returned slightly higher nickel grades, including 14 metres at 1.36% nickel, 12 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 looks to work the drilling into an updated resource estimate, with a targeted release this month. Mindoro also plans to release a thermal upgrade scoping study for the Agata project before September, hopefully with improved margins over direct shipping.
Mindoro released a preliminary economic assessment (PEA) in late March that evaluated a direct shipping option and a high-pressure acid-leach option. Direct shipping showed low margins, and it is likely the country will join others in banning the practice in the future. Mindoro is now 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 estimates a 15-year mine life.
The study foresees 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 result in a cash flow of US$173 million per year, a net present value with a 10% discount rate 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 US$8.50 per lb. to 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 highlights the country’s potential to supply nickel concentrate to China’s steel industry from high-iron, low-nickel laterite ores through sintering.
Mindoro plans to complete a pre-feasibility study and a second resource upgrade on Agata before 2012.
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 close to the ocean.
Mindoro’s share price closed unchanged at 18¢ on the day the latest results were released. The company has 230 million shares outstanding, and about $8 million in the bank. The International Finance Corporation is one of its major investors.
The company is closing its Edmonton head office on Aug. 31 and moving it to Melbourne, Australia.
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