In August 2005, Falconbridge Ltd. (now Xstrata Nickel) agreed to sell the property to First Nickel for $2 million in exchange for the right to buy and process the ore.
“It’s an exploration property that Falconbridge developed the resource on a few years ago, and then they decided it didn’t meet their (needs),” said Bill Anderson, president and CEO of First Nickel.
As part of the agreement, Premiere Ridge must be in production by July 1, 2008. The feasibility study was originally due on Aug. 1, 2006, but First Nickel was unable to meet the deadline and asked for several extensions.
Anderson said the project still has to be approved by the company’s board and then get federal and provincial permits. He said he is confident that the mine will be in production in March 2008, several months ahead of the deadline.
“We’re proceeding as if we’re going to go ahead,” he said.
“We’re well into the permitting process and discussing with outside engineering and contracting firms everything that needs to be done. We’re sort of in full-blown pre-production mode.”
The feasibility study indicates Premiere Ridge would generate an undiscounted pre-tax cash flow of $27.8 million after capital recovery, assuming average metal prices of US $7.62 per pound for nickel, US $2.19 per pound copper and US $9 per pound for cobalt over a five-year mine life.
The project’s probable reserves now stand at 1.15 million tonnes grading 1.33 per cent nickel and 0.53 per cent copper. Yearly output will average 230,000 tonnes, increasing to 291,000 tonnes in 2009.
The Premiere Ridge deposit extends from surface to a vertical depth of 200 metres. A ramp from surface has been proposed to access the deposit. Given the relatively shallow depth of the main part of the deposit, the proposed mining methods are a combination of room and pillar, blasthole (longhole), and ramp pillar recovery.
Anderson expects it will take $50 million to develop the mine, including the cost of building a road to the site from Xstrata’s Strathcona Mill.
The company already owns and operates Lockerby Mine in the southwest end of Sudbury. It has been in production since the beginning of 2006 and employs approximately 140 people. Anderson said Premiere Ridge will create another 140 jobs once it’s in full production.
“We know the nickel is there,“ said Anderson. “What we want to do is mine it at a profit.”
The First Nickel CEO said he is not put off by the recent drop in nickel prices from an all-time high of US $24 per pound to US $14 per pound.
“Two digit per pound nickel prices are still pretty exciting. We, like most other people out there, don’t expect to see any other serious softenings in the future, especially in terms of demand. The future is still very, very bright for nickel.”