NICKEL DEVELOPMENT: Ambatovy costs rise a further 16%

MADAGASCAR - The cost of developing the Ambatovy nickel project go only one way, up. Forty-per-cent owner Sherritt International of Toronto said this week that costs have risen another US$740 million or 16%. The escalation was due to inaccurate bulk material quantity estimates (US$300 million), service costs associated with the extension of the schedule (US$195 million) and capitalization of operating costs due to construction delays (US$245 million.

Sherritt estimates that the total pre-production capital cost of the project will be US$5.5 billion, excluding financing charges, foreign exchange and working capital requirements. The revised timeline calls for the first nickel to be produced in Q1 2012.

The Ambatovy project will have an annual production rate of 60,000 tonnes of nickel, 5,600 tonnes of cobalt, and 200,000 tonnes of ammonium sulphate in each of its 30 years of operation.

Besides Sherritt, the other partners in the project are Sumitomo (27.5%), Korea Resources (27.5%) and SNC-Lavalin (5%).

Complete information is posted at www.Ambatovy.com.