| Wed 26 Sep 2007, 8:00 | | ARI - ARM - Approval for Nkomati R3.2 billion ($44 |
|
ARI
ARIM
ARI - ARM - Approval for Nkomati R3.2 billion ($445m) Phase 2 Large Scale Mining
Expansion to quadruple annual nickel production to 20,500 tonnes
Johannesburg, South Africa and Moscow, Russia Federation
African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
ISIN: ZAE000054045
("ARM" or the "Company")
Approval for Nkomati R3.2 billion ($445m) Phase 2 Large Scale Mining Expansion
to quadruple annual nickel production to 20,500 tonnes
Johannesburg, South Africa and Moscow, Russia Federation
ARM and Norilsk Nickel, 50:50 JV owners of the Nkomati Nickel Mine in the
Mpumalanga Province in South Africa, are pleased to announce the approval of a
R3.2 billion ($445 million) Phase 2 Large Scale Mining Expansion to increase
average annual nickel production to 20,500 tonnes from 5,500 tonnes and extend
the life of mine by 18 years to 2027.
Peter Breese, Chief Executive of Norilsk Nickel International commented:
"Approval of the Phase 2 Expansion cements Nkomati`s long term future as it
unlocks around 1 million tonnes of contained nickel resource and quadruples
annual nickel production to 20,500 tonnes. Norilsk Nickel is planning to invest
R6 billion (+/-$830 million) in Africa over the next three years to double
nickel production and implement the innovative Activox technology.
The expansion also delivers a powerful boost to the regional Mpumalanga economy
through this large direct investment and the creation of new employment
opportunities. The recent successful delivery of the Interim Plan on time,
within budget and with zero lost time injuries by Nkomati project team bodes
well for this project."
ARM Chief Executive Officer, Andre Wilkens said: "The Phase 2 Large Scale Mining
Expansion takes ARM to the next level of becoming a larger producer of nickel,
in line with our 2 x 2010 strategy, and at an operational cost which is globally
competitive."
The Phase 2 Large Scale Mining Expansion
The Phase 2 Large Scale Mining Expansion will exploit two zones of the large
layered polymetallic disseminated sulphide resource, which contains 904,335
tonnes of nickel. The first is the Main Mineralised Zone (MMZ) which is
currently being mined by the Interim Phase through underground and open pit
mining. This is overlayed by the Peridotite Chromititic Mineralised Zone (PCMZ)
which will be mined by open pit mining. In addition to nickel, by-products of
PGMs, chromite, copper and cobalt will also be recovered.
Mining will continue from the underground mine, at the rate of 47,000 tonnes per
month (tpm), and the development of two new open-pits, Pits 2 and 3, which will
produce 578,000tpm of ore at a steady state of production. The average mill
grade for the total project will be in the order of 0,4% nickel, over the life
of mine.
Nkomati expansion phases (all on a 100% basis)
Phase 1 Phase 2 Total Nkomati
(Interim) (Large Scale) Released for at steady
Completed construction state
A B
Plant capacity MMZ: 100,000 MMZ: 375,000 PCMZ: 250,000 Total: 625,000
(tpm)
MMZ underground MMZ underground PCMZ openpit MMZ/PCMZ
MMZ openpit MMZ openpit combined
Nickel c. 5,500 c. 15,000 c. 5,500 c.20,500
production (tpa)
The current 100,000tpm concentrator will be upgraded to 250,000tpm to process
the PCMZ ore and a new 375,000tpm concentrator for the MMZ will be constructed
to give an overall concentrator capacity of 625,000tpm. The mine`s related
infrastructure will also be upgraded, including construction of two new tailing
facilities and an upgrade of the power supply to 80MVA.
Construction will commence in early 2008 and is scheduled to take 24 months from
announcement date. Production will be sequenced, targeting initial production
ramp up from the MMZ concentrator during the third quarter of 2009, with full
production by first quarter 2010, and then initial PCMZ production ramp up
targeted during the third quarter of 2010, with full production by 2011.
Average annual nickel production in concentrate is forecast to be 20,500 tonnes
over the 18 year life of mine. By-product production is expected to be 9,000
tpa copper and 110,000 ounces per annum PGMs, predominantly palladium.
The expansion secures 254 jobs and creates an additional 330 new jobs and during
construction will employ some 2 000 contractors.
Project Economics
The project assessment was based on a capital cost of R3.2 billion ($445
million) in May 2007 terms and an average nickel cash cost forecast of $3.57/lb.
This will result in an after-tax real IRR greater than 20%. The project will be
funded from Nkomati internal cash flows and by both partners when required. The
release of the project triggers the $20 million payment by Norilsk Nickel
(previously LionOre) to ARM in accordance with the original transaction.
Refining
Nkomati has already secured toll smelting and refining capacity for its
concentrate. A Bankable Feasibility Study ("BFS") will be carried out during
2008 to examine the viability of constructing an Activox refinery for Nkomati.
For all investor relations` queries, please contact:
Pieter Rorich
Executive Director: Investor Relations and New Business Development
Office: +27 11 779 1300
Mobile: +27(0)82 570 5064
E-mail: pieter.rorich@arm.co.za
Or
Monique Swartz
Corporate Development Manager
Office: +27 11 779 1507
Mobile: +27(0)83 411 2881
E-mail: monique.swartz@arm.co.za
Sandton
26 September 2007
Issued by sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Date: 26/09/2007 08:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
