According to a recent report by Mining Weekly Online, the African Eagle operations director, Chris Davies, has said that based on the results of the latest discovery of nickel in the Tanzania mining area of Dutwa, analysts have predicted that the area will develop into a low-cost mine by 2012 and have the capacity of producing nickel at a price of USD 8 per pound.
In addition, Mining Weekly Online also reported Mr. Davies as indicating that the basis of the economic viability for the proposed nickel project was the result of a nickel price of USD 7 per pound along with a breakeven price of USD 6.50 per pound
Based on the given price of USD 7 per pound, the project would effectively produce a yield of USD 1.5 billion in revenue spanning the life the mine, which is currently already 21 years old.
Mr. Davies went on to indicate in the Mining Weekly Online report that, based on studies that had been conducted at an earlier date, the most feasible option for processing at the mine was agitated-tank-leach technology, followed by heap leaching.
As a result of processing the mines through one, or both, of these options would be that there would no longer be the possibility of requiring the usage of the expensive, high-pressure acid-leach technology, which had given a bad reputation to nickel laterites in general.
In addition, Mr. Davies said that the current USD 100 per ton that was being used for transport costs was likely to decrease following the anticipated investment project in the port of Mombasa and the proposed new investment project for the rail networks in Tanzania and Kenya, both of which would notably enhance the economics of the project.
During the first operational years of the mining project, there also exists the possibility to high-grade, which, according to Mining Weekly Online, would help to further improve the returns of the mine.
Because geologists were able to detect the presence of nickel mineralization at the mining location in Dutwa with the naked eye, discovery costs were able to remain very low.
In fact, according to the finance director for African Eagle, Bevan Metcalf, both the Aim- and the JSE-listed company still retained GBP 1.5 million in cash.
Mr. Metcalf went on to explain that the current pre-feasibility study was expected to require between GBP 2 million and GBP 2.5-million of investment, meaning that, in the coming months, company would need to raise additional funds, most of which would likely come through private placement.
“We see this operating as a low-cost mine,” said Mr. Metcalf to Mining Weekly Online, “and that’s key for the future.”
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