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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: peter snowdon who wrote (24538)	11/25/2003 8:52:10 AM
From: I_C_Deadpeople	Respond to of 39344

Canico Resource receives Onca-Puma scoping study Canico Resource Corp CNI Shares issued 31,952,898 Nov 24 close $15.72 Tue 25 Nov 2003 News Release Mr. J. Michael Kenyon reports CANICO RESOURCE CORP.: ONCA-PUMA SCOPING STUDY Canico Resource has received a scoping study from Hatch Ltd., which is independent of Canico, in which the order of magnitude capital and operating costs of four potential production options for the Onca-Puma nickel laterite deposits in Para state, Brazil, have been estimated. This study projects capital and operating costs based upon inferred resources and on early stage plant designs and indicative historical costs from similar projects, some of which are currently in operation. The capital costs, which are inclusive of project infrastructure, mine, process plant and ancillary facilities, are considered accurate to within +30 per cent/-20 per cent, for the current level of scope definition. The operating costs are considered accurate to +/- 20 per cent and have been based on preliminary unit costs for fuel and electric power, which are the major components of the operating costs. All costs are presented as second quarter 2003 United States dollars. Summaries of the projected capital costs, operating costs and related mining schedules for the four options examined are set out in the tables which accompany this news. For purposes of the scoping study, Hatch considered a preliminary mining plan for the deposits prepared on the basis of inferred resources and the limited metallurgical work done on the project to date. In this plan, a number of pits were defined and each pit was categorized based on the composition of the laterite in that pit. Mining is scheduled so that material from multiple pits is blended on a continuing basis to achieve a suitable feed for a pyrometallurgical process plant based on the conventional rotary kiln-electric furnace (RKEF) technology. Characteristics such as nickel grade, iron content and the ratio of silica to magnesia are balanced in the blending process. The plan adjusts for stripping ratios and was designed so that high-grade areas are mined first to maximize nickel production in early years. Metallurgical work conducted to date on the Onca-Puma laterite material is preliminary in nature and consists of limited small-scale laboratory tests on Onca-Puma material and computer simulations which incorporate process plant operating parameters from typical RKEF operations. The scoping study has been prepared on the assumption, which Hatch considers reasonable (subject to confirmation by continuing work), that the laterite in the mining schedule is amenable to conventional pyrometallurgical treatment to recover almost 90 per cent of contained nickel. The metallurgical work completed to date has shown that there are no significant limitations to producing marketable ferronickel or nickel matte. The scoping study projects a mine life of about 89 years for a single line RKEF plant and 45 years for a two line plant under the preliminary mining schedules. The portions of the inferred resources selected for the preliminary mining schedules total 109,820,800 tonnes grading 1.80 per cent nickel at an overall cutoff grade of 1.08 per cent nickel and a silica to magnesia ratio of 1.84. A considerable quantity of the nickel laterite would remain unprocessed at the end of these schedules and the study did not explore production opportunities for this material. "This scoping study is preliminary in nature and was focused on basic process flow sheets. There was no attempt to optimize any aspects of the project, or to mine and process all of the mineralized laterite, or to define project economics," said Michael Kenyon, president and chief executive officer of Canico. "Canico is well advanced on detailed drilling and metallurgical studies which will lead to resources which are better defined and understood. We are also about to start a full feasibility study, to give us more precise project economics. Concurrently, we will complete a number of trade-off studies aimed at achieving the best mining plan, the best available operating costs in the proposed pyrometallurgical plant and generally the best plan for developing the project. The study shows that Onca-Puma has great potential for a long mine life and significant annual nickel output. Projected capital and operating costs are quite attractive, particularly for ferronickel, which carries no third party smelting or refining charges. We are very encouraged by the study." TABLE 1-1 CAPITAL COST ESTIMATE SUMMARY (millions of dollars) Single-line ferronickel Direct costs 294.9 Indirect costs 123.7 Owner's costs 22.9 Contingency 81.2 Provision for taxes 33.2 Total project cost 556.0 Double-line ferronickel direct costs 467.0 Indirect costs 189.1 Owner's costs 26.8 Contingency 120.3 Provision for taxes 51.5 Total project cost 854.7 Single-line matte direct costs 330.5 Indirect costs 138.7 Owner's costs 25.6 Contingency 90.3 Provision for taxes 37.2 Total project cost 622.4 Double-line matte direct costs 524.3 Indirect costs 211.3 Owner's costs 29.9 Contingency 133.4 Provision for taxes 57.6 Total project cost 956.6