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Mar 29, 2011
Mindoro Receives Favourable Economic Assessment for Agata Nickel Project
  • Economic assessment indicates high value, low operating cost nickel project
  • Potential to enhance project economics through addition of regional resources
  • Early stage production option to be advanced via thermal upgrading tests

EDMONTON, ALBERTA, March 29, 2011 - Mindoro Resources Ltd. (TSXV: MIO; ASX: MDO; Frankfurt: WKN 906167) (Mindoro) is pleased to announce the release of the Agata Nickel Project Preliminary Economic Assessment (PEA). The PEA has been reviewed by independent international consulting group Golder Associates Pty Ltd. The PEA financial model demonstrates low operating cost potential and a high Net Present Value (NPV) based on hydrometallurgical processing of the Agata resource. Based on the encouraging results of the PEA the company will immediately commence a pre-feasibility study on the Agata Nickel Project.

The PEA financial model is based on a mining inventory derived from the Agata resource, processed at a rate after ramp up of 1.8 million tonnes producing 18,000 tonnes of nickel per annum in intermediate product for 15 years via a combination of proven hydrometallurgical technologies: High Pressure Acid Leach (HPAL) - Atmospheric agitated tank Leach (AL) and Saprolite Neutralisation (SN). A summary of the PEA financial model is presented below. The currency is US dollars and all net present values (NPVs) are at a 10% discount rate.

Nickel Price $/lb $10 $12 $8.50
NPV (10% discount rate) Post Tax $Million $390 $680 $160
IRR Post Tax % 19% 26% 14%
  • Installed capital cost estimate, including 30% contingency, $906 million.
  • After tax cash flow @ $10/lb Ni $173 million per annum. Payback 5.2 years from cashflow.
  • Cash operating cost $2.61/lb Ni no credits or $1.65/lb Ni with cobalt and power (acid plant) credits.
  • Mining inventory of 26.1 million tonnes; processed 25.4 million tonnes.
  • Processing rate 1.8 million tonnes per annum after ramp up. Mine life 15 years based on Agata only.
  • Nickel production after ramp-up 18,000 tonnes of nickel per annum in mixed hydroxide product (MHP), 77% nickel value payable (50% of cobalt value payable, @ Ni price x 1.66) based on recent contracts.
On the basis of the results of the preliminary economic assessment the company will immediately commence a pre-feasibility study into the Agata Nickel Project. The lead consulting group has been appointed and will be announced in a separate release.

"The Agata preliminary economic assessment indicates a high value, low operating cost nickel project based only on the current resource. Definition of further resources from the regional drilling program will enhance the economics of the project through additional mine life and/or expanded production capacity", said Mindoro's President and Chief Executive Officer Jon Dugdale. "Based on the positive results from the preliminary economic assessment the company will immediately commence a pre-feasibility study on the Agata project".

A scoping study into direct shipping of higher grade zones within the Agata resource was also completed as part of the preliminary economic assessment. The study examined three production scenarios, all of which are economically viable. However, due to the relatively low margins and current market uncertainty associated with "direct shipping ore" (DSO), the company is not planning to pursue a stand-alone DSO at this stage, but is examining the potential for thermal upgrading to enhance the value of the shipped product. The early results from thermal upgrading tests in progress at SGS-Lakefield in Perth, supervised by Hatch Associates Pty Ltd, are positive, and the company has committed to further, larger scale testing at a Mines and Geosciences Bureau (MGB) based testing facility in the Philippines. Positive results from this work and preliminary economic and marketing studies, will allow completion of a feasibility study into the early production stage of the project.

The preliminary economic assessment has been completed by Golder Associates Pty Ltd under the direction and supervision of Peter Onley, an independent qualified person with independent international consulting group Golder Associates Pty Ltd and Tony Showell, an independent qualified person with Battery Limits Pty Ltd. Golder Associates Pty Ltd has reviewed the geology, mining, metallurgy, process design, residue and water management inputs into the preliminary economic assessment and Peter Onley and Tony Showell have authorised the technical information detailed in this release. The NI 43-101 technical report will be filed on SEDAR within 45 days.

On behalf of the board of directors
Jon Dugdale,
President and CEO

For further information, please contact:

Australia :   Jon Dugdale, President and CEO, Tel: +61 3 9614 5055
Email: or

Nathan Ryan, NWR Communications, Tel: +0420 582 887
Canada : Penny Gould, VP Investor Relations,
Tel: +780.413.8187, Toll free 1.877.413.8187
Germany : Robert Sarcher, Aprendo Capital, Tel: +49.821.6089051,


The financial modeling results reported in this release are based on a project METSIM(r) mass and energy balance model produced by Boyd Willis Hydromet Consulting (BWHC) representing a refinement of the scoping study base case release of October 2010 (see NI 43-101 technical report filed on SEDAR November 2010). Capital and operating cost estimates have been modified from scoping study inputs produced by Ausenco-Vector to approximately ±35% accuracy. The inputs to the preliminary economic assessment including mining, metallurgy, processing and infrastructure, including residue storage facilities, have been reviewed by Golder Associates Pty Ltd. The study was based on a mining inventory derived from the current Agata mineral resource estimate (including inferred resources) released September 2010.


A bench-scale testwork program was undertaken at SGS Lakefield Oretest in Perth, Western Australia, a NATA certified laboratory, during Q3 and Q4 2010. The program investigated ore slurry settling properties, high pressure acid leaching (HPAL) of limonite and transition ores, atmospheric leaching (AL) of saprolite ores, saprolite neutralisation (SN) and leach slurry (CCD) settling properties.

Ore slurry settling tests demonstrated that HPAL feed ore could be thickened to 40% solids and saprolite ore could be thickened to 35-36% solids. HPAL testing of a limonite/transition ore blend at 255°C demonstrated exceptionally fast leaching rates, establishing that 98% nickel extraction and 95-96% cobalt extraction could be achieved within 20 minutes. Further testing revealed that 95% nickel extraction was possible in just 5 minutes. Atmospheric leach testing of saprolite ore achieved up to 97% nickel extraction and 94% cobalt extraction, in less than 3 hours.

Saprolite neutralisation of combined HPAL and AL discharge slurries demonstrated that residual free acid levels could be reduced to less than 10 g/L with simultaneous nickel extraction from the SN feed ore of 83-89% (cobalt 78-85%).

The metallurgical assumptions derived from this testing are a marked improvement on those assumed in the scoping study and have impacted on both capital and operating costs. These assumptions have been used to develop an optimised limonite-saprolite processing model.

Mineral Resource and Mining Inventory:

The Mineral Resource estimate for the Agata Nickel Project released on the 9th September 2010, and described in a technical report published on SEDAR in October 2010, forms the basis of the mining inventory estimates for the preliminary economic assessment. Note that the potential quantity and grade of material included in the mineral inventory is conceptual in nature and based solely on the Mineral Resources and includes Inferred Mineral Resources. There has been insufficient work to define a Mineral Reserve and it is uncertain if further work will result in the determination of a Mineral Reserve.

The mining inventory production schedule has been produced based on preliminary open pit designs. The total mining inventory is summarised in the table below:

Mining Inventory Type: M Tonnes Nickel % Cobalt % Iron % Mg %
Limonite to HPAL 9.5 0.95 0.11 45.6 1.2
Low Mg Saprolite to HPAL 4.7 1.20 0.03 14.2 14.1
Medium Mg Saprolite to AATL 6.0 1.15 0.03 11.6 17.1
High Mg Saprolite to SN 5.9 1.03 0.02 9.7 19.1
Total 26.1 1.05 0.06 24.0 11.2

Process Plant and Infrastructure:

The process design for the leach plant will be based largely on the hydrometallurgical processing route proven for over 40 years at the Sherritt International Corporation operated Moa Bay project in Cuba and at the Sumitomo/Nickel Asia operated Coral Bay Nickel Project (Coral Bay) in the Philippines operated since 2005.

The PEA is based on a project model processing limonite and low magnesium grade saprolite by conventional HPAL and medium magnesium grade saprolite by a parallel atmospheric agitated tank leach (AL) circuit. Atmospheric (pressure) acid leaching is a well-established technology practiced in many industries over several decades. The project model also includes a sulphuric acid plant capable of meeting all acid requirements.

The rapid leaching rates and reactivity of the Agata resource allows for recovery of additional nickel and cobalt via innovative saprolite neutralization of discharge from the HPAL and atmospheric leach circuit. This process will consume much of the free acid. Neutralization of the remaining acid will be achieved using limestone from local sources.

After saprolite neutralization, the nickel and cobalt bearing "pregnant" solution will be recovered by conventional counter-current decantation (CCD), followed by limestone neutralization of excess acid and precipitation of iron and other metals. Nickel and Cobalt recovery into saleable mixed hydroxide product (MHP).

Leach residue and solution will be neutralized prior to being pumped at about 30% solids content, to a residue storage facility (RSF), via an overland slurry pipeline. The tailings impoundment area will consist of either walled and lined valleys and/or lined, shallow, nested impoundments including mined open pit areas. A substantial installed and sustaining capital allowance has been made for industry leading practice residue management as recommended by Golder Associates Pty Ltd.

Other infrastructure includes a permanent accommodation village, dedicated access and other roads, purpose built port and loading facilities, water and sewerage treatment plants, limestone quarry and waste tips.

There is ample, accessible seawater and river water to meet the projects water requirements for mining, processing and other uses.

The project will have a dedicated steam generator power station to provide electrical power for the operation of the process plant, services and utilities, as well as for the accommodation village and all other related infrastructure. The normal source of high pressure steam will be from waste heat boilers in the sulphuric acid plant. Supplementary power from fuel-oil fired boilers to maintain operations and power generation when the acid plant is not operating. During normal operations the sulphuric acid plant will produce sufficient steam to meet all of the project's heating and power requirements plus surplus power for export to the local grid, providing a power credit to the operation. The company is also investigating potential for supplementary hydro-power generation.

Preliminary Economic Assessment:

Installed capital cost estimates include processing plant, acid plant, initial residue storage facility, general infrastructure, mining related capital costs, duties and taxes for equipment, technology fees/project support, sustaining capital and an estimate of working capital. A 30% contingency has been added to all installed capital costs.

Operating cost estimates include mining, processing, acid production, residue and water management sustaining capital costs, government charges, royalties, administration and marketing costs. Cobalt and acid plant power credits are also included but separated in the table below.

Cashflows are calculated on an after-tax basis applying the taxation regime generally applicable to major projects in the Philippines.

A summary of the Agata Nickel Project PEA financial model results is tabulated below:

PEA Financial Model Results:
Feed Throughput Processed Per Annum: 1.79 million (M) tonnes per annum (M tpa),
Limonite:  0.67M tpa processed
Saprolite: 1.12M tpa processed
Total Throughput Life-of Mine 25.4 million tonnes
Life-of-Mine 14.8 years
Nickel in Mixed Hydroxide (MHP) per annum 18,000 t Ni ; 930 t Cobalt pa after ramp-up
NPV(10%) @ $10/lb
NPV(10%) @ $12/lb “current” nickel price
NPV(10%) @ $ 8.50/lb long term analysts
$390M – post tax @ 2011
$680M – post tax @ 2011
$160M – post tax @ 2011
IRR: 19%
IRR: 26%
IRR: 14%
Payback: 5.2 years
Payback: 4.1 years
Payback: 6.6years
Net Cash Flow post tax@ $10/lb $1.63 Billion (B) post tax LOM
$173M pa post tax
Tax Paid LOM $500M
Capital Cost, Installed (Up-Front) $906M (including 30% contingency)
Capital Intensity $23/lb Ni /per annum
Pre-development $12M
Development Capital $688M
Contingency (30%) $206M
Operating Costs – before Credits $2.61/lb Ni
Mining 0.54
Labor 0.31
Sulphuric acid production 0.62
Processing 0.61
Utilities 0.04
Maintenance 0.31
Administration, Overheads and Marketing 0.18
Cobalt By-product Credits (Cobalt 1.66 x Ni) (0.45)
Power Credit from Acid Plant (0.51)
Operating Cost after by-products and power 1.65/lb Ni

Scoping Study into Direct Shipping Ore (DSO):

A scoping study was completed as part of the PEA examining the potential to develop a small scale DSO operation shipping up to 2 million wet metric tonnes (WMT) of ore per annum to destinations in the Asia Pacific.

The Mineral Resource estimate for the Agata Nickel Project released on the 9th September 2010, and described in a technical report published on SEDAR in October 2010, forms the basis of the mining inventory estimates for the three production scenarios below (see Note 2):
  • Limonite Only: shipping 7.6 million WMT DSO over 3 years,
  • Saprolite Focus: limonite and saprolite, shipping 4.7 million WMT DSO over 2 years, and
  • Limonite and Saprolite (optimum case), shipping 8.9 million WMT DSO over 4 years.
The PEA financial modelling results for the three options are tabulated below:

Parameter Limonite Saprolite Limonite + Saprolite
Mine Life (years) 3 2 4
Nickel price NPV Break-even ($/lb) 10.20 10.30 10.00
Initial Capital Cost ($M) 8.0 8.0 8.0
Capital cost Breakeven ($M) 13.7 13.1 19.9
LOM Operating Cost ($/t) Shipped 15 19 17
Mining Inventory limonite (kWMT) 7,540 3,340 7,540
%Ni 0.92% 0.98% 0.92%
%Fe 48% 47% 48%
Mining Inventory Saprolite (kWMT)   1,430 1,360
%Ni   1.6% 1.8%
%Fe   13% 13%

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