Since 2007, Nickel Mountain Resources has been working towards developing the Rönnbäcken Nickel Project (RNP). A subsidiary, Nickel Mountain AB, was established to hold 100% the assets of the RNP. The RNP is situated in the Swedish Caledonian mountain range in northern Sweden, about 25 km to the south of the village of Tärnaby, Storuman Municipality in Västerbotten County. The area is host to a number of Swedish mine operations. The Rönnbäcken nickel property comprises several exploration licences and exploitation concessions, which are 100% owned by Nickel Mountain. There are a series of low grade nickel deposits amenable to open pit mining within the Project area. The Project comprises three low-grade, high-tonnage, nickel-sulphide deposits amenable to open pit mining: Vinberget, Rönnbäcksnäset and Sundsberget. The shape and volume of the deposits make them suitable for high tonnage, low cost, open pit mining at a low strip ratio. Nickel Mountain Resource’s objective is to establish a 26,000 tonnes of nickel per year mine and concentrator for producing a high grade nickel concentrate.
A preliminary economic assessment was completed in April 2011 on RNP by SRK Consulting (Sweden) AB.
The following is a summary of the findings of the preliminary economic assessment:
- Average annualized production of 26,000 tonnes of nickel and 760 tonnes of cobalt in concentrate based on an annual feed throughput of 30 million tonnes.
- Potential to produce over 1 million tonnes per year of a 66%+ magnetite iron ore concentrate byproduct.
- Life of Mine of 19 years with a potential for this to increase following the delineation of further resources by ongoing exploration.
- Low stripping ratio of 0.72:1 (waste tonnes:ore tonnes).
- High grade sulphide concentrate with a 28% nickel content. High concentrate grade has been demonstrated through our own lab and minipilot work with Outotec, as well as through full scale pilot work (4,000 tonnes) conducted by Boliden during the 1970s. Raglan was piloted at this same pilot plant.
- Estimated start-up capital cost of US$1,161 million, including working capital.
- Excellent infrastructure with close access to hydropower, power grid, roads, seaport and airport.
- Low sulphide content and presence of buffering minerals reduce risks of environmental impact.
Assuming a saleable magnetite concentrate:
- Average LOM mine gate operating cost of US$4.81/lb (US$10,604/t) of nickel recovered to concentrate
- Average LOM C1 cash operating cost of US$3.55/lb (US$7,826/t) of payable nickel net of by-product credits.
- Pre-tax net present value at a discount rate of 8% ranges from US$1,045 million to US$2,301 million between nickel prices of US$9.00/lb and US$12.00/lb generating an internal rate of return from 19.9% to 31.6% and an undiscounted cash flow range from US$3,467 million to US$6,264 million, respectively.
The previous granting of the Company’s exploitation concessions K nr 1 and K nr 2 for the Vinberget and Rönnbäcknäset deposits along with the recently granted exploitation concession K nr 3 for the Sundsberget deposit, have all been appealed by the Vapsten Reindeer Husbandry to the Swedish Government. A final decision by the Swedish Government on these appeals is pending.
Launch of a Pre-Feasibility Study (PFS) as well as studies required for the Environmental Permit application have been put on hold pending a positive government decision to uphold the granting of the two concessions. Once a decision is made by the Company to launch these activities, the timing required for preparation and filing of a final application for an Environmental Permit is estimated to take at least 18 months, after which the environmental court is estimated to require a further 18 months for reviewing the application. This period of 3 years would also be required to complete prefeasibility and definitive feasibility studies. Once an Environmental Permit and a other permits have been granted, construction activity can commence and is planned to occur over a period of two years.
While a 66% iron magnetite concentrate could be produced, a recent study by an external steel consultant in the fall of 2012 concluded that the occurrence of higher levels of nickel, chrome and zinc and the fine particle size of the magnetite concentrate product would not be attractive for carbon steel applications. The same steel consultant recommended that the Company considers conversion of the magnetite concentrate to direct reduced iron/hot briquetted iron for use as a scrap substitute or supplement in low alloy and stainless steel manufacture. There is a potential target market close by with a number of low alloy and stainless steel producers located in Sweden or within the European region. The same consultant pointed out that the magnetite concentrate would be potentially suitable as dense medium (DMS) in coal processing applications. Initial testwork has indicated that the magnetic properties and the size distribution of the concentrate would be acceptable. However, the market for DMS applications is limited.
Nickel Mountain is also assessing the possibility of producing ferronickel, a value-added product, from further processing of the Ronnbacken nickel concentrate. An initial desktop study has indicated the possibility of producing either an intermediate calcine product for sale to ferronickel smelters, or a final ferronickel product for sale to stainless steel mills.
All of these product options are encouraging, however, the company needs to conduct further technical-economic studies which will be required later on to generate more detailed operating costs and capital expenditure estimates and to confirm the viability of such process routes.