Lionore Australia will spend more than $250 million on short-term upgrade and development for its Western Australian nickel assets to push nickel production from 19,000 tonnes a year to over 30,000tpa by the end of 2006.
LIONORE Australia will spend more than $250 million on short-term upgrade and development for its Western Australian nickel assets to push nickel production from 19,000 tonnes a year to over 30,000tpa by the end of 2006.
While feasibility studies are still under way, the company has instigated major expansion plans at its Lake Johnston project, 130 kilometres west of Norse-man, and at Black Swan, 55km north of Kalgoorlie. Both have price tags of $100 million over the lives of the projects.
LionOre is also developing its $35 million Waterloo underground project, 90km north of Leonora, and is in the midst of a $14 million feasibility study on Honeymoon Well, 60km south-east of Wiluna, one of the largest nickel deposits of its kind in the world.
The study is expected to be concluded early next year.
A little further out are plans to rebuild and restart the failed Bulong laterite plant, 30km east of Kalgoorlie, which originally cost $400 million in plant and infrastructure, and for which LionOre paid Preston Resources’ receiver $15 million.
LionOre is looking to convert the plant to its 80 per cent owned Activox hydrometallurgical technology for the recovery of nickel from sulphide concentrates.
If it decides on this route, which is likely, the company has to pay another $7 million.
LionOre’s Australian managing director Mark Ashley told WA Business News that Bulong, with the potential to produce up to 40,000t of nickel a year, is “about three years out”.
In recent years, LionOre has established a strategic processing presence in the Goldfields nickel region, owning two of only three concentrators there – at Lake Johnston operation’s Emily Ann mine 130km west of Norseman, and Black Swan.
Add the Bulong plant to this equation and it is little wonder the company will spend about $20 million on exploration this year looking for more resources.
“We are looking at a number of properties,” Mr Ashley told WA Business News.
At Lake Johnston, tenders are already out for some of the lead items to lift production from the current 500,000tpa, producing 11,000tpa of nickel, to 1.5 million tpa for up to 14,000tpa nickel.
The $100 million price tag over the life of the mine includes underground development, plant upgrade to handle lower grade ore and to add another five years to the mine life.
It is a similar story at 80 per cent owned Black Swan, a $80 million to $100 million spend to push the mine life out to 2010 and more than triple throughput to two million tpa for about 14,000tpa nickel.
Two extra mills have already been bought to provide the economies of scale necessary to mine lower grade ore and alleviate the problems that hit the mine with by high cash costs and reduced production in the June 2005 half.
The mine is 20 per cent owned by US chemical and nickel producer OMG, which processes the nickel in concentrate at its plant in Finland.
The Honeymoon Well feasibility study is expected to result in an eight to 10 million tpa plant producing 30,000 to 40,000tpa nickel, with potential production around mid 2008.
Earlier this year, LionOre gave the green light to develop its high grade Waterloo nickel sulphide deposit as an underground mine. High grade nickel concentrate production at 4,000tpa nickel is scheduled for the fourth quarter next year.
Mr Ashley said there were no plans for a plant with a number of processing options, including Emily Ann and Black Swan.
Toronto-based parent LionOre Mining International also has nickel production out of Africa and plans to produce 30,000t of nickel this year, rising to 45,000t in 2007 and 80,000t by mid 2008.
The company’s Australian operations also include the Thunderbox open pit gold mine, 45km south of Leinster, which produced 85,536 ounces at a cash cost of $377/ounce for the June 2005 half.
