Victory Nickel, a Toronto junior miner, says its Minago sulphide nickel project, 225 kilometres south of Thompson, could produce 11,000 tons per year of high-grade nickel in concentrate over a seven-year operating life, but capital costs to build the mine are estimated at $596 million and the break-even price for nickel is estimated at $5.06 per pound.
Wardrop Engineering Inc., which recently completed its definitive feasibility study for Victory Nickel on the open pit portion of the Minago deposit, confirmed an open pit mine and concentrator at Minago would be technically and commercially feasible, but did not include a study of the potential for underground mining at the project.
Metallurgical and by-product testing earlier evaluated mineralization at depth in the Nose Deposit, which contains the entire current Minago nickel resource. Drilling has taken place along the North Limb, a two-kilometre long domain of little exposed nickeliferous ultramafic rock with the potential to contain a substantial nickel resource.
Victory owns 100 per cent of the Minago sulphide nickel deposits in the Thompson Nickel Belt.
Wardrop's definitive feasibility study included plans for a fracturing or frac sand plant, producing 1,14-million tons of frac sand, which is used to improve recoveries in the oil and gas industry, and which forms part of the overburden that must be removed before mining nickel from the Minago open pit.
Victory Nickel chief executive officer Rene Galipeau says, "Completion of the DFS represents a major milestone for the development of the Minago deposit."
"Our next steps are to create a project execution plan, begin road construction on site, select financial advisors to structure financing and submit the environmental impact statement with a view to receiving environmental and operating permits before the end of 2010."
The company hopes to increase resources and reserves at Minago, and is also evaluating a chloride hydrometallurgical process, owned by Outotec, to determine whether the concentrates at Minago can be treated using the technology to improve recoveries.
The company currently has cash and liquid assets of around $5.5 million, but will need about $42 million this year if it maintains the development schedule laid out in the definitive feasibility study.
The firm is "reviewing its options" to finance the work until permitting is completed, and plans to look at a combination of equipment leasing, equity and debt finance to fund the project to production.
It will also investigate off-take agreements for frac sand, the company said.
The most significant components of expenditure this year include site utilities, camp facilities and site development.
