INTEX RESOURCES - The International Resource Journal

Intex Resources
www.intexresources.com.ph/mindoronickel

2 ASIA AND THE MIDDLE EAST Intex Resources
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Intex R
Seeing green

MAY 2012 The International Resource Journal
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Asia and the Middle East
esources

4 ASIA AND THE MIDDLE EAST Intex Resources
Intex Resources’ big ambitions to start
a green nickel mining operation in the
Philippines hinges upon attracting the
right partners and negotiating with local
communities
“The most exciting thing about this deposit
is that we have managed to make a low grade
of less than one per cent economically feasible
while planning a carbon-neutral mining operation,
possibly the world’s first carbon-neutral
Intex Resources’ flagship Mindoro project has
the kind of story many engineers love to hear. It
intends to be a scalable, holistically designed system
that incorporates green design into its moving
parts, ultimately planning to deliver what might be
the world’s first carbon neutral mining project.
Located in the central part of the island of
Mindoro in the Philippines lie some 300-million
tonnes of mineral resources (defined to date), holding
2.6-million tonnes of nickel. But the mineral
resource is only a portion of the success story, says
Jon Steen Petersen, interim president and CEO of
the Oslo-listed company. Before taking on the role,
Petersen had a career as associate professor in
economic geology and geochemistry at the University
of Oslo and Aarhus in Denmark.
The other part of the story, he explains, is
that special properties of the ore plus a definitive
feasibility study with innovative green design has
given Mindoro Nickel bragging rights to potentially
the smallest carbon footprint of any nickel processing
plant and one of the most cost-efficient
per pound nickel production.
nickel project with a near-zero carbon footprint,”
says Petersen.
The definitive feasibility study (DFS) shows
the nickel production costs at $2.11/lb, allowing
for between $5 and $6 margin per pound at current
nickel prices, and not including the value of
a series of by-products.
An important part of Intex’s philosophy for
the project is to maximise the use of all components
in the process, including ore, consumables
and waste products. Processing of the laterite
ore will result in not only 53,000 tonnes per annum
(tpa) nickel briquettes but also an estimated
75,000 tpa metallurgical chromite from the
limonite beneficiation plant. In addition, the operation
will extract some 16,000 tpa cobalt as a
sulphate salt, in a form that is applicable for electronic
battery industries. Finally, some 150,000
tonnes of ammonia sulphate, a prime fertiliser,
will come as a by-product from the metals plant.
“If you include chromite, cobalt and ammonium
sulphate as by-products the cost will go
from $2.11/lb to 53 cents, and there is even
potential for adding rare earth elements and

MAY 2012 The International Resource Journal
5
JCP GEO-EX SERVICES, INC.
Services Offered:
Single Tube and Triple Tube Core Drilling
Modified Banka Drilling on Sand
Onshore and Offshore Geotech Drilling
Related Geological and Geodetic Services
- ISO 9001:2008 Certified
- a DENR/MGB-accredited
service provider specializing
primarily in Ni-laterite drilling
- 5S Practitioner
- guaranteed 95% core recovery
Contact Person:
MR. JESUS C. PALMA JR.
Calderon Compound, Banawa
Cebu City, Philippines
TeleFax: (032) 262-5398 / 272-7560
Mobile: 09176243786
Email: jcpgeo2003@yahoo.com
www.jgsi.com.ph
Recent Projects:
Regency Mines PLC (Papua New Guinea)
Intex Resources Philippines, Inc.
QNI Philippines
CMGVI Mining Ventures Corporation
Sinosteel Philippines H.Y. Mining Corp
/ HY Chromite Mining and Dev Corp.
MRL Gold Philippines, Inc.
Philnico Mining and Industrial Corporation
Harita Group of Companies(Indonesia)
Forum Cebu Coal Corporation
Benguet Corporation
BHP Billiton
Rusina Nickel NL (HQ3)
Ipilan Nickel Corporation
Berong Nickel Corporation
Macroasia Corporation
scandium to the production from the leached
solutions. We have done test work to show that
we can extract these minerals economically,
and potentially produce 100 tonnes of scandium
per year, which is more than the world’s
current production,” he adds.
‘Green’ limits
Still, some cold hard realities have to be taken
into account. CAPEX was estimated at some $2.4
billion in the original DFS, which is clearly a tall
order for a greenfield project in today’s global
economics. Far from being discouraging, Petersen
explains that implementing the project in
three stages would provide distinct advantages
in addition to taking the target CAPEX down to
$800 million for the first stage, which is a much
more manageable amount.
“We decided to redesign the project, still
maintaining the maximum size as the ultimate
goal, but starting with a first stage that would
produce about 18,000 tonnes per day (t/d) for
$800 million and suddenly we were in a totally
different ball game when it comes to financing,
as early cash flow can be established. We
wanted to maintain all the design benefits but
to build the plant in segments, using smaller
units, and with the option to allow bypass of

6 ASIA AND THE MIDDLE EAST Intex Resources
individual components during maintenance of
such units,” he explains.
The deposit itself consists of two principally
different laterite ore types: limonite and saprolite
ore. The limonite is enriched in nickel and cobalt
and can be successfully processed by high-pressure
acid leach technology because of its high
iron content, whereas saprolite ore is low in iron
and generally considered better suited for other
processing techniques.
“Traditionally, saprolite and limonite ores
are not processed together; saprolite is usually
taken to smelters, whereas limonite is processed
with hydrometallurgical methods, but
we have studied this and after successful test
work found that it is possible to process both
ore types economically using hydrometallurgy
methods, only” Petersen explains.
Because saprolite is magnesium-rich, hydrometallurgical
processing in atmospheric pressure
tanks will require about twice the amount of acid
than the limonite circuit. However, more acid also
means more waste heat and an acid plant, which
converts native sulphur to sulphuric acid, can be
used to the company’s advantage in generating
electricity. Based on the full size plant design,
the steam from the acid plant can generate
110MW of carbon-free electrical power.

MAY 2012 The International Resource Journal
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“The trick is the acid plant will generate not
only all the acid and steam we need for bringing
fluids around in the processing plant, but also
provides all the electricity we need, including
what is required to transport the ore from the
mine to the plant near the coast, and all carbon
free and ndependent on fossil fuels, and this is
significant because you can imagine – six-million
tonnes for the full-sized plant or two-million
tonnes for the small – trucks for this transport
would eat a lot of diesel. We don’t have to buy
diesel for this because we will transport the ore
via cable conveyors from the mine site to the
plant site,” Petersen says.
Match-making
Intex Resources is now looking for partners to
build a consortium that can provide the project
with engineering and operational experience. “A
competent EPC contractor can make a significant
difference on the project. In addition to engineering
and operational experience, we are also looking for
partners, who are interested in off-take or end-use
of the products and are interested in taking part
in making this exciting project happen,” Petersen
says. The consortium is also looking for bringing in
a major Philippine industrial partner.
Intex Resources has recently signed an MOU
with MCC8, a major metallurgical construction
group in China, to establish a consortium for
Mindoro Nickel. MCC8 used to be the main nickel
company in the country, but Jinchuan, now Chinas
largest nickel company, was spun out and
MCC8 remained the engineering arm for the nickel
industry, but also developed new directions.
“MCC8 is one of those examples of a
partner that might not seem the most obvious,
being primarily an engineering group, but they
have started getting involved in green projects
worldwide, with clean technology and watercleaning
projects in Africa and elsewhere, and
this is very appealing. Here is a Chinese company
that wants to show that things can be done
green and are just as excited about the potential
of a “green” carbon-neutral mining project as we
are,” Petersen says.
If a proper consortium can be brought together
to help realise the Mindoro project, Intex Resources
is prepared to offer 90-per-cent share to
the consortium. “We are first and foremost mine
developers, not mine operators, so we would like
to see this project happen, so we can find and
develop the next big project – this is what we do
best,” he adds.
The company’s next big project could well be
a significant molybdenum deposit in Norway, but
Petersen does not want to get ahead of himself.
If a Mindoro consortium can be established

8 ASIA AND THE MIDDLE EAST Intex Resources

MAY 2012 The International Resource Journal
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soon, possibly with financing along with it, then
construction of the first stage could take approximately
two years targeting a production
from 2014. At the moment, the nickel market is
volatile and much affected by pig-iron production
based on high-grade laterite ore from Indonesia
and the Philippines, which today accounts for
some 50 per cent of China’s nickel consumption.
However, the high energy- costs of this process
coupled with resources restrictions and coming
export ban will eventually deplete this market,
potentially leading to a market deficiency, explains
Petersen.
At the same time, the Philippines is located
very centrally for resource-hungry neighbours
such as China, Japan, Korea and India – which
today consume over 60 per cent of the world’s
nickel . At the same time, the Philippines is the
natural domestic market for the by-product: ammonium
sulphate which is a preferred fertiliser
for rice and sugar cane in tropical climates.
Community relations
Mindoro Island’s economy has so far been dependent
on traditional farming and fishing, and
where powerful typhoons constantly cause destruction
of seasonal crops and damage to local
infrastructure, including roads and bridges.
The island also suffers from frequent extensive
flooding, which causes further aggravation of the
already-vulnerable agro-based economy.
While the development of a large industrial
operation can bring a much-needed boost to
the local economy, it understandably generates
concern among the predominantly rural population,
regarding the consequences for their traditional
trades. The license area of approximately
100km 2 is being used by about 200 indigenous
Mangyan families for their traditional nomadic
lifestyle. Intex has established a close relationship
with these communities and assisted
through community relation programs, including
a potable water supply, medical assistance
as well as educational and capacity building
programs in agroforestry and farming. During
exploration campaigns, the Mangyans population
is employed on an equal basis with other locals,
and often in a rotary system, to ensure a maximum
of interested people will receive the benefits
of this engagement.
“About the time we arrived in 1997, the Indigenous
Peoples Rights Act had just been launched
and for first time granted the Indigenous people
rights to their ancestral land. Since then the
implementation has been ongoing and gradually
completed – basically providing these people
with an identity and a legal protection to and title
to their land,” says Petersen.

10 ASIA AND THE MIDDLE EAST Intex Resources
The company has signed agreements with
the affected population and focused on medical,
educational and agricultural CSR commitments,
for example, the establishment of spring-fed
water systems that are now in multiple villages
benefiting some 10,000 people.
“Mining today is not just a technical issue,
mining today is as much a social engagement
programme that helps local people to utilise and
get benefits from their resources…many people
are sceptical and believe that they will not get
the benefits, as this often happened in the past .
I think this is where we still have to showcase it.
Legislation has changed very much over the last
30 years and everybody in the mining industry today
understands the need of social engagement
in connection with the exploitation of all natural
resources,” Petersen adds.
Despite his assurances that the company
has the best intentions of the community in
mind, there is a vocal resistance and scepticism
towards Intex’s plans in the area. Anti-mining
groups aligned with Norwegian NGO’s have accused
Intex of breaches of OECD guidelines. In
general, mining has a disreputable past in the
Philippines as a result of environmental degradation
from previous operations. Though cleared
of any wrong-doing, some outstanding issues of
non-compliance were identified by a Norwegian
government investigation, which the company
has promised to improve. Intex has pointed out
that the OECD guidelines in question are within
the context of operating companies and the company
plans on following all of those rules when
operations at the site commence, a viewpoint
backed by a UK-led commission which also found
no evidence of bribery allegations made against
Intex, Petersen notes.
“We are not under criminal investigation and
we are not under suspicion of having broken
any laws. In fact we have been met with such
accusations in over 12 years from anti-mining
groups and obviously made every effort to strictly
operate under government compliance and had
a dozen Philippine clearances from national
authorities, in response to various accusations,”
explains Petersen.
“Where indigenous people have special
rights overriding the national legislation, we have
followed the advice of the national commission for
Indigenous people, which serves as a government
agency charged with protecting indigenous peoples’
interest. We follow their advice about who to deal
with since only 200 families live inside the area
affected by our planned mining operations. This is
a very delicate issue, absolutely,” he says. “We wish
partnership with the host communities in pursuing
local and national development and will be

MAY 2012 The International Resource Journal
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transparent and diligent in our obligations (taxes) to
the local and national governments.”
Petersen points out that most mining projects
in the Philippines are facing similar fierce opposition
and it is also seen in many other parts of the
world. The company plans to take each issue in
stride and respond appropriately to any allegations.
“It is a negotiation. We have discovered a
significant, substantial deposit. We have found a
way to utilise that deposit in an economical manner,
using new technologies in pursuing responsible
and green mining. What we are now trying to do is
realise it and part of that is to obtain social acceptability.
Our focus now has to be about explaining to
people what the risk and benefits are, it has to be a
democratic selective process...and in that process
we will find a period of debate and discussion, of
scepticism and fear,” Petersen says.
www.intexresources.com.ph/mindoronickel

AS SEEN IN THE MAY 2012 ISSUE
OF THE INTERNATIONAL RESOURCE JOURNAL