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Msg  9692 of 65647  at  5/31/2007 10:45:23 AM  by


Toledo Mining Ships Nickel Ore Directly To China

Toledo Mining Ships Nickel Ore Directly To China

By Rob Davies

It is amazing how the market invents solutions to problems. The current shortage and high price of nickel has prompted Toledo Mining to ship laterite ore directly from the Philippines to China for smelting. It wasn’t so long ago that laterite ores were regarded as high cost because of the high energy required to smelt them. Now it seems to be economic to ship ore grading 1.5% nickel across the South China Sea to without any beneficiation at all. Toledo has only been doing this since February 2007 so no financial reports are available yet. So far it has made four shipments totalling 170,000 tonnes from its Berong and Ipilan projects on the island of Palawan in the Philippines. Its initial agreement is to ship 900,000 tones of direct shipping ore to China for metallurgical testing with prices for the dry laterite ore directly linked to LME nickel quotes.

While this early work is underway the company is preparing a feasibility study on developing the Berong project in which it has a 56.1 per cent stake. The resource at Berong is estimated on a non JORC basis at 275 million tonnes at a grade of 1.3% Ni. That might not sound very much but at today’s prices that material is worth about US$500 a tonne. Moreover, this laterite is low in phosphorus making it particularly amenable to ferro-nickel smelting.

The facilities that are taking the ore are nickel pig-iron, acid leaching and ferro-nickel processing plants and it is the nickel pig-iron smelters that are having a big impact on the supply side of the nickel business.  These plants are run by small operators and are essentially pig-iron furnaces that are taking laterite ore into the charge to produce nickel enriched pig iron. While it is not suitable for the higher grade 300 series stainless steels it can be used for lower grade 200 series stainless steels. According to Stephen Briggs of Société Générale this process has come from nowhere to account for 30,000 tonnes of nickel production in 2006 and it could be as much as 70-80,000 tonnes this year. 

Toledo has commissioned Snowden of Australia to prepare a resource statement on Berong to JORC standards and has asked SNC Lavalin of Canada to research the options of processing the nickel on site. One method would be a high pressure acid leach process. Mining operations at Berong are being conducted under a one year, renewable mine permit allowing it to mine one million tonnes a year. Completion of the feasibility study will greatly assist the award of a full mining permit. In the meantime Toledo is working to upgrade the facilities at Berong by seeking to improve the haul road to the loading facility.

A major advance would be to replace the current system of barging the ore out to freighters and replacing it with a trestle conveyor that would allow direct loading rather than double handling. However, permits for these improvements are taking time to come through. Despite that the market has taken to the story and pushed the shares up from 150p to 332p taking its market capitalisation to £95million.   In the background is also the potential of the Celeste/Ipilan nickel project of 75 million tonnes of non JORC resource in which it has a 52 per cent stake.   Adding that into the equation adds another dimension to the Toledo story and the first set of results showing the revenue from the direct shipping should be very interesting indeed.

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Msg # Subject Author Recs Date Posted
9702 Re: Toledo Mining Ships Nickel Ore Directly To China crdnlau 0 5/31/2007 11:04:17 AM

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