NICKEL DEVELOPMENT – Feasibility study in for Ambatovy

The results of the feasibility study on the Ambatovy nickel project in Madagascar have been received from coordinat...
The results of the feasibility study on the Ambatovy nickel project in Madagascar have been received from coordinator SNC-Lavalin Engineers & Constructors Inc. DYNATEC CORP. of Richmond Hill, Ont. is the 100% owner and operator, and has made an agreement whereby the former project owner PHELPS DODGE CORP. will participate in the project as a shareholder of Dynatec.

The study suggests an annual design capacity of 60,000 tonnes of LME Class 1 nickel metal, 5,600 tonnes cobalt and 186,000 tonnes ammonium sulphate, over a 27-year project life. The proven and probable reserves are 125 million tonnes grading 1.04% Ni and 0.099% Co (0.8% Ni cutoff), with the potential for more.

The project will use only proven metallurgical processes that have already been successfully applied at other sites at a full commercial scale. The estimated cash operating cost of US$0.67/lb Ni after credits for the first 10 years is among the lowest in the world. The base case capital cost is US$13.45 per pound of annual nickel equivalent production, or US$2.25 billion (including US$330 million for a refinery and assuming that US$287 million of required infrastructure improvements are all funded by the project).

The after tax, all equity rate of return (in real terms) is estimated at 11.1% using financial base case pricing (US$3.50/lb Ni, US$10.00/lb Co); or 16.4% using 1980 to 2003 average metal prices (US$4.07/lb Ni and US$18.65/lb Co).

Discussions are underway with base metal producers and nickel consumers to add an equity partner or partners in the project.

Ambatovy is located 80 km east of the capital of Madagascar, Antananarivo, within a few kilometres of the main road and rail system connecting Antananarivo and the main port city of Toamasina on the east coast. The project will consist of an open-pit mining operation and an ore preparation plant at the minesite. The slurried laterite ore will then be delivered through a 195-km pipeline to a pressure acid leach process plant located near Toamasina. This plant will produce a mixed sulphide product containing average grades of 55.2% nickel and 4.2% cobalt.

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