|
 Larger Font |  Smaller Font |  Printer Friendly
Nickel Production Pending For Mindoro In The Philippines
By Claire O'Connor and James West
MidasLetter.com
Friday, July 30, 2010
It is rare, in the mining world, to secure quality along with quantity, but Mindoro Resources (TSX.V: MIO) believes it has done just that. With a well established license to operate in the Philippines, Mindoro has defined a large nickel-cobalt resource on its Surigao Project, has proven up gold resources on the Archangel Project and has major producer Gold Fields farming in on three copper-gold projects.
Under the new leadership of CEO Jon Dugdale, appointed in February 2010, the company has been riding a tidal wave of new ambition and fresh enthusiasm, aiming to reach its main goal of developing the Agata direct shipping ore project and achieving nickel production by early to mid 2011.
The History Of Mindoro
Mindoro was formed in 1996, co-founded by Tony Climie B.Sc., P. Geol., who continues to act as COO and Exploration Director for the company. From the outset, Mindoro's primary focus has been exploration in the Philippines for world class copper-gold projects. However, the company soon came to recognize that the Philippines is a country that contains world class nickel projects too.
Since then, Mindoro has been continuously exploring in the Philippines, gradually building its portfolio base and working towards constructing a strong foundation of mineral resources and licence to operate in major, established mining districts.
With Dugdale on board, and a strong foundation established by Tony Climie and his team, the opportunity is there for Mindoro to become a mid-tier mining company producing nickel, cobalt, gold and copper on China's doorstep.
"Several of the projects had been advanced to the resource stage, including the nickel laterite in the Surigao region and some gold resources at the Batangas Projects." Dugdale comments on the company's progress before he joined: "But by the end of 2009 Mindoro was running low on financial capacity to move those projects forward. So my involvement as CEO began early this year. I came from the main shareholder of Mindoro, Asian Lion Ltd, where I acted as President. I became involved in Mindoro in January with short term financing and during the process of that raising, I became CEO. The key focus used to raise funds and move the company to the next stage was the development of the nickel project."
Surigao Potential
The Surigao region is already a major nickel producing district, and there are at least ten direct shipping ore nickel laterite mines either in production or being developed in the district. The Surigao District consists of two main nickel laterite belts; an eastern coastal belt that is held by a variety of companies and a western coastal belt, which is largely controlled by Mindoro.
Much of the Surigao District nickel laterite provides direct shipping ore to processing plants in China, Japan and Australia. Dugdale explains who exactly is working in the area and why it continues to show considerable promise for the local processing of ores.
"Surigao and Agata are located in a very well developed mining district, the Surigao Mining District, where there are a number of other mines, including laterite projects. Sumitomo Metal Mining, a Japanese company, and local Philippines company Nickel Asia are now building a major high pressure acid leach processing project to produce an intermediate nickel product to ship to Japan. Sumitomo and Nickel Asia also run one of the most successful acid leach nickel laterite projects in the world, Coral Bay, which is also in the Philippines. So there's an impressive track record of developing successful nickel projects in the Philippines, and a strong mining history."
The Agata Nickel Resource
Located within the Surigao Tenement, the Agata Project is home to Mindoro's most promising nickel laterite resource. The potential of the Agata nickel laterite came to Mindoro's attention in 2006 and a resource was quickly proven up of 26.9 million tonnes of nickel laterite at 1.11% nickel measured and indicated, and an additional 3.8 million tonnes of nickel laterite at 1.06% nickel inferred.
Aside from the impressive National Instrument 43-101 figures, the Agata resource has a number of key advantages to it.
"The property is particularly close to the coast, which means that it's not very far to truck material down to a loading facility and ship to China for instance. Also, the ocean is quite deep close to shore so ships can come in close for loading, and the coast is protected from the monsoons coming in from the northeast so you can ship and mine virtually all year round. It's also worth noting that there is very little forest and population on the actual resource, and this reduces and mitigates any potential environmental impact. Another big advantage is, because of Mindoro's long term involvement in the region and our emphasis on good environmental practices and community relations, we've developed a strong track record and achieved government and the community support. That has assisted us in achieving local support, and to obtain the key initial permits and certificates that allow us to move forward towards developing the project."
Right now, Mindoro is targeting the first stage of the Agata project as direct shipping ore, to generate cash flow by early to mid 2011. To achieve this, the company intends to complete mine planning on Agata by the end of August 2010 and then to focus on obtaining the final permits to commence development.
"We aim to have the mine planning done by August, which would enable us to pull all our material together for a final submission to the mines bureau of the Central Government." Dugdale explains, "We're anticipating that final approval will be received by the end of the year which would enable us to commence construction by the end of 2010 or early 2011. At the same time, we are fast-tracking evaluation of low-capital cost, upgrading technologies, such as sintering, to produce much higher-value iron and iron-nickel products. This has the potential to quickly phase out the shipping of raw, low-value DSO product, and to form an intermediate development stage prior to a major acid-leach processing operation."
Surigao Regional Projects
Aside from Agata, Mindoro also has an exploration target on Surigao's regional tenements in the north, with an anticipated 50 to 70 million additional tonnes in a grade range of 0.9 percent to 1.2 percent nickel and 28 percent to 32 percent iron.
A program of hand auger drilling was conducted to establish nickel laterite areas at least three meters thick and around 1% nickel on the northern projects. A total of 125 hand auger holes were drilled and a total of 438 samples assayed. Thicknesses and nickel grades within an economically relevant range were utilized in deriving the exploration target.
However, the nickel laterite mineralization on these projects is currently an exploration target only. Detailed drilling will be required to move this target into the National Instrument 43-101 compliant resources and, although there is no guarantee that these resources will be economic or sufficient to support a commercial mining operation, Mindoro intend to commence drilling between now and the end of the year.
The company received an options study on the northern projects in March 2010 and commenced a scoping study in late March with additional bench scale metallurgical testing. Although it can't be guaranteed, Mindoro is hopeful that drilling these targets could, with Agata, build the total resource towards 100 million tonnes and should that happen, a major acid leach project is on the cards.
"In parallel to the planned Agata development; we've commenced a scoping study into a major acid leach project. It's quite a big concept and potentially a big project. We're aware that the capital requirements would be very large but we feel that because of the quality of the resource that we've identified, and the likely qualities of the regional target, that it's justified. Sumitomo/Nickel Asia's Coral Bay project is believed to be producing nickel at less than $2.50 a pound and that's because of the outstanding metallurgical characteristics of the ore here. We've also done metallurgical testing on the Agata project and the metallurgical qualities look to be similar to Coral Bay which encourages us that we'll be able to put together quite a compelling scoping study."
Batangas Copper and Gold
Although Mindoro is presently focused on the Surigao nickel developments, the company's copper and gold targets in the Batangas region cannot be overlooked when assessing Mindoro as a whole. Of prominence in the company's impressive array of copper and gold projects are the Gold Fields (NYSE: GFI) joint venture projects and the Archangel Project.
Goldfields JV
On May 5, 2009, Mindoro announced that a Memorandum of Agreement had been signed with a member of the Gold Fields group of companies, whereby Gold Fields may earn up to a 75% interest in each of Mindoro's El Paso, Lobo and Talahib porphyry copper-gold projects located in the Batangas Province.
On July 5th 2010 it was announced that Gold Fields had commenced drilling on the Ulupong-Sawahan epithermal gold zone on Mindoro's Lobo Project. Mindoro sees this as something of a free kick; while Mindoro's focus is on nickel, Gold Fields continues to advance the copper gold projects, leaving Mindoro with the choice to go back and renew its focus on gold, and potentially copper gold, in the future.
Archangel Gold
Mindoro counts the Archangel Project as one of its most outstanding gold targets. A resource estimate on the property in 2008 proved up an inferred amount of 262,000 ounces of gold at 0.7 grams per tonne and Mindoro have plans to further expand this resource.
Combined with the Gold Fields JV, Mindoro has quite an impressive gold camp on the back burner.
Capital Coup
To finance the present Mindoro ambitions, the company recently completed a $4 million financing. An impressive coup for the company comes in the form of the International Finance Corporation (IFC), the private investment arm of the World Bank, announcing it will take a 6.3% stake in Mindoro by investing $2.1 million.
The capital will be used to deliver Mindoro's three key focus' – the approval of the direct shipping ore on Agata, the proving up of the regional resource on Surigao, and the completion of the scoping study.
StoneBridge Analysis
What's more, Mindoro was recently the subject of a glowing StoneBridge Capital analysis report. StoneBridge is an Australian owned global investment, advisory and trading house. The company "aims to enhance value by providing clients with a portfolio of StoneBridge solutions rather than focusing on individual products" and in a report issued June 9th 2010 it would appear that Mindoro, in StoneBridge's opinion, is a solution.
According to the report:
"We see Mindoro as an exceptional multi commodity play due to the advanced Agata Nickel
Project moving towards early cash flow, with major project potential, in parallel with Goldfields
exploring for large copper/gold porphyries deposits on behalf of Mindoro.
We value Mindoro using a combination of discounted cash flow and sum of the parts including
a development scenario at Agata DSO and exploration risk-weighted valuation for the
exploration target and additional resources at Agata as well as copper porphyry exploration
being carried out by Goldfields. Our $0.43/share price target includes a DCF valuation for
Agata DSO of C$0.10/share (fully diluted). In addition we have valued the remaining
resources and exploration target at US$0.04/lb of Ni implied. Due to the early stage of the onsite
processing studies we have not attempted to value the phase 2 with a DCF model. As
studies progress and results are released we feel comfortable that significant value will be
added to the overall Agata project."
Open Options
The key aspect of Mindoro Resources' business strategy is options – the company has them, they're at liberty to prioritize them as they see fit, and they're keeping all of them open.
"We have a huge number of options to build value into the company that we'll be moving forward over the next six months and once we do that, it'll provide us with a platform to do three things – generate cash flow from the Nickel direct shipping ore project, move forward with a much larger scale on-site processing nickel laterite project, either on our own or with a partner, and also return to testing our outstanding gold, potentially copper gold targets, down the track."
Follow Mindoro's progress from explorer to producer at www.mindoro.com.
DISCLOSURE: A fee has been paid for the production and distribution of this article and as such should be viewed in the context of advertising.
SOURCE: http://www.midasletter.com/news/100730_Nickel-production-pending-for-mindoro-philippines.php
**************************************************************
|
Nickel, Copper and Gold
Sign up for the Midas Letter Free Edition and get a free sample of the "Midas Letter Premium Edition".
