Spot Prices Wednesday February 5, 2003 Courtesy of Scotiabank

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ighted with the momentum, direction and timing of this project,” says Canico President Michael Kenyon. “Puma has big tonnage, at a high nickel grade, in a rising nickel market.”

The junior is now drilling some 10 km southwest of the Ona nickel laterite deposit, which has an inferred resource of 22.6 million tonnes grading 2.1% nickel, based on a cutoff grade of 1.5% nickel. The nickel laterite at Ona extends over 18 by 1 km and occurs in the same geologic and topographical setting as Puma.

“We’re working to uncover the true potential at Ona, complete a feasibility study and build Canico into a significant nickel producer,” adds Kenyon.

Canico acquired the Ona-Puma property from Inco (N-T) in return for raising at least US$22.5 million by Jan. 31, 2003. At the end of the day, Inco will receive no cash payments but hold an 18% stake in the junior.

The two have agreed to an offtake deal that allows Inco to buy all nickel matte produced on the property, and a technical service agreement allows Canico to use the major’s reduction smelting process.

A 1997 scoping study by Watts Griffis & McOuat indicates the deposit could be exploited using conventional smelting. A single-line pyrometallurgical process, similar to that used by Inco in Indonesia, would generate annual throughput of 1.1 million tonnes of laterite, yielding 50 million lbs. nickel matte per year over a mine life of 20 years.

The stripping ratio is 0.4-to-1, and the recovery rate is set at 91.6%. The estimated capital cost is US$450 million, while the operating cost is pegged at US$49 per tonne.

The 11,000-metre drill program is part of feasibility study, which should be completed in 2004.