Rio Narcea gets nod at Aguablanca

Rio Narcea Gold Mines (RNG-T) is stepping up construction at its Aguablanca nickel-copper-PGM project in southwestern Spain following governmental approval of the environmental impact assessment.

Capital costs are pegged at US$64.1 million, and the net present value is US$106 million at a 5% discount rate and a nickel price of US$2.99 per lb.

Over a projected life of 10.5 years, an open-pit operation would produce 9,080 tonnes nickel annually, along with 6,810 tonnes copper and 25,000 oz. platinum group metals — all in concentrate. Plans call for the ore to be processed on site in a nickel sulphide flotation plant with a capacity of 1.5 million tonnes per year.

According to a bankable feasibility study, resources stand at 28.4 million tonnes grading 0.67% nickel and 0.49% copper plus PGMs. The bulk of the material is classified as measured and indicated.

Open-pit reserves are pegged at 15.7 million tonnes grading a diluted 0.66% nickel and 0.46% copper plus 0.47 gram PGMs per tonne. The estimate is based on a nickel price of US$2.99 per lb. and a copper price US73 per lb.

Financing for most of the capital cost (US$61 million) was secured in late 2002, in a joint deal with Investec Bank (UK) and Australia’s Macquarie Bank. The loan requires a nickel and copper hedging facility consisting of puts and calls, and this hedging facility covers half the nickel produced during the loan’s term.

Under a long-term offtake agreement inked earlier this year, Switzerland’s Glencore International will buy all the nickel concentrate produced from Aguablanca until 2010.

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