The Zebediela nickel project could become very important in the nickel market as it may grow to be one of the larger global nickel operations in terms of mine life and yearly production. It also has the potential to position South Africa as a significant nickel producer, URU Metals CEO Roger Lemaitre tells Mining Weekly.
A prefeasibilty study will be conducted during the next 18 to 24 months at the Zebediela joint venture (JV) project near the platinum mining town of Mokopane, in Limpopo. The study has the potential to increase Zebediela’s projected revenue from the recently completed preliminary economic assessment (PEA) by up to 25% before year-end, he reveals.
At a total combined cost of $8.3-million, the phased prefeasibility study aims to upgrade and expand the mineral resource, secure long-term water and electrical supplies and conduct geotechnical work to confirm the pit design.
The study also includes con- tinued metallurgical work, a bulk sampling programme, detailed investigations into toll smelting and refining, optimising tailings disposal options, the initiation of environmental baseline studies and confirming the economic viability of produc- ing magnetite ore as a by- product.
The NI 43-101-compliant PEA, which was recently completed, had pegged the project’s gross present value at $1-billion and also determined that it has the potential to produce 56-million pounds of nickel a year for 25 years.
Further, the JV between URU Metals and its two South African partners, nickel surveying and exploration company Southern African Nickel and Umnex Mineral Holdings, a part of investment company Umbono Capital, aims to have its asset listed on the Toronto Stock Exchange (TSX) by year-end.
URU Metals and its JV partners believe that there are three significant ways in which Zebediela could grow and hope to define them during the prefeasibility study.
Lemaitre notes significant growth in the ultimate resource size of the project, as the JV only included one-third of the cur- rently known resources in its PEA.
“The PEA considered the mining and milling of only 500-million tons of indicated resources and not its inferred resource estimate of more than one-million tons, as NI 43-101 and TSX compliance requirements stated that only indicated resources could be considered in PEA studies.”
Lemaitre adds that the JV is confident of the expansion of the ultimate resource when additional drilling below the vertical depth of 250 m takes place.
The JV has also not included the economic benefit that could result from the inclusion of the iron by-product, which has potential to improve the project’s economic substantially.
Zebediela’s economics can also be improved by defining, with further drilling, the slightly higher-grade areas of the deposit to identify the starting location of the openpit mine. This will increase the pre- dicted project revenue in the first three to five years of production, explains Lemaitre.
At the current rate of activity, mine construction is esti- mated to start as early as 2017 or 2018.
Advantages for South Africa
Zebediela can add economic value to South Africa in terms of the capital investment required, which is estimated at $708-million, says Lemaitre.
He points out that the project might also be a source of long-term quality employment, for which the number of people required will be determined by the prefeasibility study, as well as a significant contributor of royalties and taxes – both directly and indirectly through employee income taxes – to various levels of government.
Lemaitre explains that Zebediela is a large disseminated sulphide nickel deposit and few projects of this size and potential yearly output are available globally.
From an engineering perspective, the Zebediela nickel deposit resembles a porphyry/copper deposit in terms of its dimensions and mineralisations.
When compared with potential nickel laterite projects, which use capital-intensive processes, such as high-pressure acid-leach processing, this type of nickel sulphide deposit will allow the JV to be a low-cost producer that is able to withstand the shifts in the commodity price cycle.
The project’s start-up capital expenditure, including contingencies and working capital, is estimated to be $650-million, while sustaining capital is estimated at $58-million during the life of the mine. Operating expenditure is estimated to be $3.35/lb of recoverable nickel.