ONTARIO — First Nickel of Toronto has received the updated feasibility study for its Lockerby Depth nickel-copper project near Sudbury. The report, prepared by Genivar of Quebec City, indicated the payback period will be only 14 months, rather than 27 months as originally predicted. The improved payback as due to fine-tuning metal price forecasts, updated foreign exchange, revised treatment charges, and the inclusion of precious metal net smelter returns in the equation.
Assuming average metal prices of US$8.00/lb nickel, US$2.75/lb copper, and US$15.00/lb cobalt, and an exchange rate of US$0.85/C$1.00, the update points toward an internal rate of return (IRR) of 74.0%. That scenario would generate an undiscounted pre-tax, pre-finance cumulative cash flow of C$112.2 million after capital recovery. Based on a 10% discount rate the project has a $66.8 million net present value (NPV) as calculated by Genivar.
Unit cash operating costs net of by-product credits are estimated at US$4.56 per pound of nickel over the 6.5 year mine plan. Mine operating costs are estimated to average C$155 per tonne. Metal production would total 51.7 million lb payable nickel, 34.4 million lb payable copper, and 1.0 million lb payable cobalt.
Capital and operating cost estimates were unchanged from the study completed in April 2009. The capital cost of development for the Lockerby Depth project remains C$69.8 million. The mining method proposed is longhole stoping between the 65-3 and 70 levels utilizing a transverse accessed blasthole stope design.
The area to be mined includes an indicated mineral resource of 1.42 million tonnes grading 2.58% Ni, 1.60% Cu and 0.098% Co at a 1.5% nickel equivalent cutoff grade. Conversion of the resources, above the 70 level, to reserves yielded a probable mineral reserve of 1.44 million tonnes grading 2.23% Ni, 1.36% Cu and 0.083% Co. Reserves were estimated using 20% dilution, 90% overall mining recovery and 1.5% nickel equivalent cut-off grade.
At the full production rate of 800 tonnes per day, the Lockerby Depth mine plan schedule to extract the probable reserve, covers 6.5 years, including one year of preproduction and 5.5 years of development and production.
First Nickel’s latest corporate presentation is posted at www.FirstNickel.com.