Albidon's Munali Nickel Project Moves Closer to Production
By Andrew K. Burger
26 Feb 2007 at 03:09 PM GMT-05:00
PRETORIA (ResourceInvestor.com) -- Albidon Limited [AIM:ALD; ASX:ALB] announced on Feb. 19 that it has taken two important steps forward towards bringing into production its Munali Nickel Project south of Lusaka, Zambia’s capital city.
The company signed a 10-year power supply agreement with Zesco Ltd. and placed an order with China’s CITIC Heavy Machinery Company Ltd. for the manufacture and supply of two ball mills for Munali’s nickel concentrator.
Management in a media release noted that concluding these two agreements is particularly significant from a project management perspective given their long lead times for delivery. With them in place, Albidion intends to accelerate its Munali development plans, aiming for initial nickel concentrate production and subsequent project ramp-up in mid-2008.
Status Report
Albidon recently released updates and additional details concerning Munali and the other projects in its portfolio in its quarterly report for the period ended Dec. 31, 2006.
China’s largest nickel refiner, the Jinchuan Group Ltd., has signed a “life of mine” off-take agreement with the company for the nickel produced from the Munali mine. The Mine Gate Off-Take Agreement removes the risks associated with the transport of the concentrate from Munali to a smelter, according to management.
The agreement also includes Jinchuan’s purchase through a private placement of US$5 million worth of Albidon shares and a subordinated debit facility for a further US$20 million. The details of this finance package are currently being finalised.
New Equity & Project Finance
The European Investment Bank and Barclays Capital have received mandates to act as joint Lead Arrangers for up to US$60 million of project finance.
The financing is subject to completion of due diligence and detailed documentation expected to be finalised by mid-2007. Once completed, the capital raised will provide the remaining funding required to complete the Munali Project, including construction costs and working capital, according to management.
The debt issued will ensure that the company will have sufficient capital to continue the company’s exploration and business development activities. In addition to Munali, in Zambia these include a uranium exploration agreement with Energy Ventures’ African Energy Resources Ltd. and a 10% stake with Goldstream Mining NL in the Luwumbu Platinum Joint Venture.
Albidon during Q4 2006 raised an additional US$35 million in equity capital, before expenses, through a private placement. The company issued 39.5 million new ordinary shares to institutional investors in October. The exercise of 150,000 Unlisted Options during the final quarter of 2006 added another A$90,000 to the company’s capital base.
Management reported that the company’s cash position as of calendar year-end 2006 was A$49.5 million.
In addition to its Zambian projects, Albidon has base metal mining interests in Malawi, Botswana, Tanzania and Tunisia.
Progress at Munali
Initial forecasts for production from Munali anticipate nickel mining and processing at a rate of 900,000 tonnes per annum (tpa) over a 10-year project life. According to management, Munali will be a low cost producer of nickel due to efficient and low-cost mining methods, the high-quality of existing infrastructure and a simple metallurgical flow sheet.
An update on project development activities at Munali is included in Albidon’s Q4 2006 report. These included expanding and upgrading the existing infrastructure necessary for the construction phase of the project, such as road building, land clearing of portions of the concentrator site, construction of an explosive magazine and completion of water diversion levies to protect the box-cut and other key infrastructure from rainfall expected during the wet season, according to management.
Albidon also drilled additional water bores, which are expected to significantly increase the on-site water supply. The bores are to be pump tested this quarter and will assist in draining water from portions of the deposit as required, as well as providing process water supply.
Progress was also made with regard to the building of new houses and the clearing of new farming plots for resident relocations. Seven new farm plots were cleared and cropped to assist the villagers during the first cropping season at the relocation area, management reported.
Going Forward
Albidon now plans to move up its plans for site preparation and construction, mobilization of a mining fleet, the building access roads and development of the underground mining decline at Munali.
The company during Q4 began advanced three-dimensional modelling of the geology and geophysical properties of the Munali intrusion. The programme is expected to provide additional details into the nature, composition and possible extent of the Munali system’s mineralisation and will be used to develop and evaluate new targets for additional drill testing.
Management also intends to continue “step-out” drilling at Munali’s Enterprise and Voyager deposits with the intention of increasing the resource base and inviting tenders for construction aspects of the project.
Chikani Exploration
Albidon has identified four prospective mining targets in the Chikani area near the Munali site. An initial test comprising three diamond drill holes at the Chikani North and Chikani South targets has been completed and assay results are expected in Q2 this year.
The company also intends to carry out geological mapping and extending existing geochemical soil sampling surveys at the Chikani South Prospect. These will be completed in the second quarter this year with an objective of defining additional drilling targets.
“Assay results from geochemical stream sediment sampling completed in previous quarters have identified two regional targets approximately 25km south-east of the Munali deposit,” management stated in its Q4 2006 report.
Anomalous levels of nickel, copper, chromium and cobalt were found in the stream sediment samples. Follow-up reconnaissance geological mapping was undertaken during the quarter as a result.
At neighbouring Chikani West, Albidon geologists have found copper bearing gossan fragments as a result of reconnaissance mapping, one of two regional-in-scale Ni-Cu-Co-Cr targets in the area.
Secondary copper minerals - mainly malachite - were identified during reconnaissance mapping. Management intends to evaluate and assess their significance by carrying out more detailed geological mapping, geochemical soil sampling and a programme of ground-based geophysical surveying. These are due to commence with the end of the seasonal rains and when ground access is sufficiently good.
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