Albidon Increases Projected Nickel Output At Munali, With First Production Just Weeks Away
By Alastair Ford
minesite.com
It’s taken just 22 months for the Munali nickel sulphide project in Zambia to move from its first published resource numbers to production. Strictly, production isn’t quite here yet, but according to Dale Rogers, managing director of Albidon, the owner and operator of Munali, “it’s literally just weeks away”. So how did the company manage to proceed so rapidly from resource definition to development, leaving others trailing in its wake?
It’s helpful of course that Zambia is mining friendly country, but there’s more to it than that. When it’s put to him that it might be because nothing went wrong, Dale Rogers raises a wry smile. “Things always go wrong”, he says. “It’s really how you cope with the problems. You’ve got to have done it before”. That’s one thing. This isn’t Dale’s first time. “I’ve done four or five open cuts before”, he explains. Another is that experience teaches what has to be done in sequence, and what can be done in parallel. “We ran as many things in parallel as we could”, Dale continues. That does add some risk, as bottlenecks can build up if too much is going on at once, and something goes wrong. But the reward is equally compelling: early production. Or to put it in investment terms, early cashflow.
So far none of Dale’s open cut developments have gone wrong, and Munali looks on track to continue the winning sequence. Albidon has just announced an increase to the projected rate of production from 8,500 tonnes per year to 10,000 tonnes per year of nickel in concentrate. Obviously on the current reserve of 6.7 million tonnes of ore at 1.23 per cent nickel, that cuts the mine life from the originally projected 10 years, down to eight and a half. But those are numbers for bean-counters and regulators to mull over. Dale is confident that there’s plenty more to come from Munali. For a start, the current pit, in the Enterprise zone of the property remains open at depth. Then there’s the outlying mineralization in the Voyager and Intrepid zones, both of which lie within a few kilometers from the plant.
What’s more, with costs running at less than US$2.50 per pound of nickel produced, while LME spot sits at over US$13.30, the company looks set to deliver some chunky margins. Why not get it out of the ground faster, with those numbers on the table? And Dale reckons that the fundamentals, if not the immediate outlook, for nickel are stronger than they are for copper. More copper supply will gradually creeping on, while Munali is in lonely territory as a new producing nickel sulphide mine. That’s one reason why Dale can state so matter-of-factly that “Munali prints money”. Perhaps he’s being slightly previous, but there’s little doubt that it will do, and soon. The output will be sold at the mine-gate to off-take partner Jinchuan, China’s largest nickel producer, with whom Albidon has gone to some efforts to establish a relationship of trust. So would Dale be willing to do business with Jinchuan again, on one of Albidon’s other projects. “Absolutely”, says Dale, but there is a rider. “They won the Munali off-take because they gave us the best terms”. The terms would have to be right again.
As to what such a development might be, well Albidon has a few irons in the fire. Its most advanced project is actually in uranium, but it also recently hit some pretty decent nickel grades in southern Botswana. Right now, as long as Munali stays on course, Dale’s investors are likely to give him a fairly free hand. He’s got a company moving into production with great margin and a payback period of less than a year at a time when money is tight and markets are frightened. To see someone deliver a project in rapid time and likely to bring in serious bucks must gladden the hearts of fund managers as they watch the value of their earlier stage investments drop away. |
