Industrial Minerals - International Nickel Study Group

INSG Environmental & Economics SessionBruce Wedderburn27 th April 2010INSG April 2010Industrial MineralsMalachite Process Consulting

AgendaLaterite hydromet optionsHPALHeap leachingCapital and operating costsEconomicsTechnology trendsINSG April 2010Malachite Process Consulting

Laterite Hydromet OptionsCaron process(Reductive roast)High pressure acid leach (HPAL)EPAL (Amax)(HPAL & AL)Atmospheric leaching (AL)Atmospheric chloride leach (ACLP)Direct Nickel (atmospheric) (DN)Sulphation atmospheric leach (SAL)Heap leaching(HL)INSG April 2010Malachite Process Consulting

HPAL ProcessExisting Operations• Moa Bay (Sherritt)• Murrin Murrin (Minara)• Cawse & Bulong (S/D) (Norilsk)• Coral Bay (SMMC)• Ravensthorpe (S/D) (BHPB)Committed Projects• Goro (Vale Inco)• Ambatovy (Sherritt)• Ramu (MCC)• Taganito (SMMC)Planned Projects• Gladstone, Vermelho, Weda Bay, Moa Bay expansionINSG April 2010Malachite Process Consulting

Heap LeachCommitted Projects• NoneWell Advanced Projects (Demonstration Plants)• Yuanjiang - China (Yunnan Tin Group)• Çaldag - Turkey (European Nickel)• Murrin Murrin (Minara)• Niquel do Piauí (Vale)• NTUA – Greece (Larco)• Acoje – Philippines (Rusina)Early Development ProjectsAt least 10 projects in early stages of developmentINSG April 2010Malachite Process Consulting

HPAL FailuresBulongComments:• Never achieved design throughput of 9 ktpa• Significant gypsum scaling• Operating costs exceeded sales revenues• Operating costs - 300% over initial estimates• Capital costs - 100% over budget• Was a demonstration plant and nevercommercially viable• Direct SX technology was a failureINSG April 2010Malachite Process Consulting

HPAL FailuresCawseComments:• Never achieved design production of 9.2 ktpa• Beneficiation circuit was a failure• Operating costs exceeded sales revenues• Operating costs - 200% over initial estimates• Capital costs - 100% over budget• Was a demonstration plant and nevercommercially viable• Simplest flowsheet failed due to ore upgradingINSG April 2010Malachite Process Consulting

HPAL FailuresMurrin Murrin• Never achieved design production of 45 ktpa• Actual capacity probably 32 to 34 ktpa Ni• Major plant modifications required• Operating costs - 400% over initial estimates• Capital costs - 100% over budgetComments:• Cash flow positive at opex of US$4.97/lb Ni• Write-off of capital and Glencore support• Brownfield expansion via heap leachingINSG April 2010Malachite Process Consulting

HPAL SuccessesCoral Bay• Achieved design rates within 14 months• Expanded plant capacity to 22 ktpa in Apr 09• Operating costs – never disclosed• Capital costs

HPAL CostsProjectCountryPlantCapacitytpa NiCapitalCostsUS$mCapitalIntensityUS$/lb NiOperatingCostsUS$/lb NiMoa Bay Cuba 30,000 N/A N/A $3.12/lbMurrin Murrin WA 32,000 $1,300m $18/lb $4.97/lbTaganito * Phil 30,000 $1,300m $20/lb N/ARamu * PNG 30,000 $1,430m $22/lb N/ARavensthorpe WA 50,000 $2,800m $28/lb N/AGoro NC 60,000 $4,300m $33/lb $1.15/lbAmbatovy Madag 60,000 $4,500m $34/lb $0.77/lb* HPAL costs to intermediate productINSG April 2010All public domain costsMalachite Process Consulting

HPAL Costs (Normalised)ProjectCountryPlantCapacitytpa NiCapitalCostsUS$mCapitalIntensityUS$/lb NiOperatingCostsUS$/lb NiMoa Bay Cuba 60,000 N/A N/A $3 - 4/lbMurrin Murrin WA 60,000 $2,000m $15/lb $4 - 5/lbTaganito Phil 60,000 $3,100m $24/lb $4 - 5/lbRamu PNG 60,000 $3,400m $26/lb $4 - 5/lbRavensthorpe WA 60,000 $3,200m $24/lb $4 - 5/lbGoro NC 60,000 $4,300m $33/lb $4 - 5/lbAmbatovy Madag 60,000 $4,500m $34/lb $4 - 5/lbAll HPAL costs to LME nickelINSG April 2010All public domain costsMalachite Process Consulting

Heap LeachWhy heap leaching?Brief historyDemonstration plantsHL capital and operating costsINSG April 2010Malachite Process Consulting

Why Heap Leaching?Positives• Process both limonite & saprolite• Process far less complex than HPAL or AL• Lower capital intensityNegatives• Heap permeability is critical• Sensitive to mineralogy• Iron chemistry• Acid consumptionINSG April 2010Malachite Process Consulting

Heap Leach History• Nickel laterite heap leaching R&D commenced inearly 1990’s at NTUA in Greece• NTUA undertook column leaches on Greek laterites• Greek laterites consist mainly of hematite and thenickel is contained in chlorite• Amenable to heap leaching with minimal acidconsumption• BHP, WMC and others undertook R&D commencingin mid to late 1990’sINSG April 2010Malachite Process Consulting

NTUA - GreeceDemonstration Plant• Built a small demonstration plant at Larco mines• Process consists of:• Heap leaching of laterite ore at ambient temperature• Purification of the leach liquor by hydrolytic precipitation• Removal of Fe, Al and Cr• Simultaneous SX of Ni and Co using the Cyanex 301• Stripping of the loaded organic by Ni spent electrolyte• Co extraction over Ni and Co using the Cyanex 272• Stripping of the loaded organic by Co spent electrolyteINSG April 2010Malachite Process Consulting

NTUA - GreeceINSG April 2010Malachite Process Consulting

NTUA - GreeceINSG April 2010Malachite Process Consulting

NTUA - GreeceINSG April 2010Malachite Process Consulting

Balkan Laterites (Greece)INSG April 2010Malachite Process Consulting

Balkan Laterites (Albania)INSG April 2010Malachite Process Consulting

Balkan Laterites (Turkey)INSG April 2010Malachite Process Consulting

Commercial Operation• Infrastructure development commenced in 2006• Forestry permits approved in February 2009• Heap leaching expected to commence in mid 2010• Full production of 20 Ktpa Ni & 1.2 Ktpa Co in 2011• Capital cost of US$428mINSG April 2010Malachite Process Consulting

INSG April 2010Malachite Process Consulting

INSG April 2010Malachite Process Consulting

INSG April 2010Malachite Process Consulting

INSG April 2010Malachite Process Consulting

Two productsFirst Nickel Product (FNP)34% Ni, 1-1.2% Co,

Economics 2006 2010Production (Ni in mixed hydroxide) tpa 20,400 20,400Construction Cost US$m 238 277Long-term Ni Price US$/lb 4.25 6.00Capital Intensity US$/lb 5.57 6.12Cash Operating Cost US$/lb 1.41 3.49NPV (10% discount) US$m 180 207IRR % 23 20Total Capital Cost US$m 300 428Source: European Nickel Updated: AGM Presentation – 29 Mar 10INSG April 2010Malachite Process Consulting

Demonstration Heap• Ore crushing completed by end Dec 09• Mix of saprolite & limonite• 3,000 tonne heaps to be constructed• Heap to be stacked to commercial heights• Rain coats to be installed to control water balanceINSG April 2010Malachite Process Consulting

INSG April 2010Malachite Process Consulting

INSG April 2010Malachite Process Consulting

Economics 2010Production (Ni in mixed hydroxide) tpa 24,500 NiConstruction Cost US$m 423Long-term Ni Price US$/lb 6.00Capital Intensity US$/lb 7.84Cash Operating Cost US$/lb 3.10NPV (10% discount) US$m 375IRR % 28Total Capital Cost US$m 498Source: European Nickel Updated: AGM Presentation – 29 Mar 10INSG April 2010Malachite Process Consulting

Murrin MurrinGrowth Targets• 400,000 tpa of scats under leach• Ore is being leached together with scats• Current pad capacity yields 2,000 tpa Ni• Heap Leach infrastructure sized for 10,000 tpa Ni• Currently reviewing growth plans including HLINSG April 2010Malachite Process Consulting

Murrin MurrinINSG April 2010Malachite Process Consulting

Murrin MurrinINSG April 2010Malachite Process Consulting

Murrin MurrinINSG April 2010Malachite Process Consulting

Níquel do Piauí - BrazilDemonstration Plant• Vale constructed a demonstration plant in northern state of Piauí inBrazil• GRD Minproc awarded contract in 2008 for front end engineeringstudy comprising• Flowsheet development,• Engineering for crushing, infrastructure and• Nickel bearing solution metallurgy,• Capital and operating cost estimates.• Completion of basic engineering planned for 2009• Commercial production estimated for 2012 with a capacity of36,000 tpa NiINSG April 2010Malachite Process Consulting

Níquel do Piauí - BrazilINSG April 2010Malachite Process Consulting

Níquel do Piauí - BrazilINSG April 2010Malachite Process Consulting

Heap Leach CostsProjectCountryPlantCapacityCapitalCostsCapitalIntensityOperatingCoststpa NiUS$mUS$/lb NiUS$/lb NiAcoje Philippines 24,500 $498m $9.20/lb $3.10/lbÇaldag Turkey 20,400 $428m $9.50/lb $3.49/lbNiWest WA 13,100 $340m $11.80/lb $2.49/lbCanegrass WA 20,000 $650m $14.70/lb $2.67/lbWowo Gap PNG 20,000 $860m $19.50/lb $2.74/lbJump-up Dam WA 10,000 $510m $23.10/lb $6.39/lbHeap leach capital costs to intermediate productINSG April 2010Malachite Process Consulting

Economic ComparisonParameterHPALHLNickel Production (LOM) tpa 55,700 32,800Cobalt Production (LOM) tpa 4,100 640Capital Cost US$m $3,750m $950mCapital Intensity US$/lb Ni $30.5/lb $13.1/lbCash Cost (exclude by-products) US$/lb Ni $4.59/lb $3.58/lbCash Cost (include by-products) US$/lb Ni $3.86/lb $3.39/lbNPV (10% real, non geared) US$m ($2,160)m $220mIRR (real, post tax) % 1.6% 17%Capital Payback (from free cash) Years N/A 7 yearsINSG April 2010Malachite Process Consulting

Technology TrendsFeNi Smelting• Well proven & low risk technology• Capital costs - recent escalation• Operating costs – energy dependent• Requires high grade ore feedOre Calcining• Been considered previously• Not demonstrated or proven• Roasting / magnetic separation of interest• Unlikely to compete with Ni pig iron• Ore upgrade for smelter - possible applicationINSG April 2010Malachite Process Consulting

Technology TrendsNi Pig Iron• Well proven & low risk technology• Environmental emissions – major concern• Low capital cost – access by small players• High operating costs• Switch from blast to electric furnaces• Ore suppliers under cost pressure• Export of ore from Indonesia to cease• To remain a swing producer – Ni price dependentINSG April 2010Malachite Process Consulting

Technology TrendsHPAL• Proven technology but high technical risk• Commercial risk – high capital exposure• Operating costs – significantly higher• Capital costs – rapid escalation• Only affordable by major companies• Project economics questionable• Future developments will be influenced bysuccess of Goro, Ramu, Ambatovy & TaganitoINSG April 2010Malachite Process Consulting

Technology TrendsAtmospheric Leach• Technology has not been demonstrated• Possible niche applications• Combined HPAL & AL possible• Capital costs are high ~80% of HPAL• Operating costs are similar to HPAL• Project economics questionable• Unlikely to succeed unless there is a step changein costsINSG April 2010Malachite Process Consulting

Technology TrendsHeap Leach• Technology is currently being demonstrated• Ore type critical for heap permeability• Site specific conditions important• Acid – key capital and operating cost driver• Operating costs – lower than HPAL• Capital costs – significantly lower than HPAL• Offers market entry by small companies• Will take time to achieve widespread acceptanceINSG April 2010Malachite Process Consulting

www.malachiteconsulting.comBruce WedderburnApril 2010INSG April 2010Industrial MineralsMalachite Process Consulting