Kenny The info below gives some background to what the market sees as a viable laterite project.
Hellsten says the fact that Ravensthorpe can use atmospheric leaching for PART of their processing ore is a great plus.But they still need the autoclaves/massive capital costs etc. Wingellina has what the market wants - low capital/operating cost, large deposit resource.
Even Jinchuan China(they produce 40,000tpa) is running low on resource and are willing to pay US$100 mill for a chunk of ANL. Uncle Ed must be a little nervous with all these hungry sharks around him.Will he get the time he needs (Dec quarter) to satisfactorily conplete the concept study and put a firm value on Wingellina ? I doubt it.Too much demand (last nights ann re the world demand for Ni and where AEX fit in was interesting) out there for good projects.
Ken Hellsten speaks frankly about the laterite nickel industry - Part 2 James Hamilton 31 October 2000 MNN: Looking at the project capital costs, were you surprised at the overruns or was this something predicted?
KH: The analysis we did showed that all the players came in close to forecast for the plant and cost of infrastructure. The overrun was due to additional capital required for rectification costs to get the plants working to design. In simple terms it took the operations longer than expected to get cash flow positive.
MNN: These rectification costs indicated by you show Cawse running at capacity but at Murrin Murrin and Bulong money is still needing to be spent. KH: Cawse is running at design capacity and running well. But remember these are the sorts of plants that require ongoing capital for two reasons. One, as you operate them you find that there is better ways of doing things and so for instance rather than replacing a line every 12 months, some bright spark will come up with a better alternative. Secondly, there are always continuing improvements to the plant.
MNN: Given that point, did the Australian industry as a whole become the loser by being first cab off the rank. Much like a new model of car, isn't it better to buy the second generation when all the little niggles are sorted out? KH: I think we took part in a window of opportunity and we are better for doing it. The Australian mining industry is very vibrant and we can call on a lot of international expertise here. You can be wise in hindsight but I think they're trailblazers.
MNN: It's interesting to hear Western Mining's thoughts on all this, isn't it? The head of the nickel division, Peter Johnston, recently gave the laterite miners a complete bagging. Have you been reading about that? KH: Peter actually spoke at the same session as myself and we handled a question and answer session together. Our views are different on some things but quite similar on a lot of them. WMC is in the very fortunate position of having mature nickel operations, with a number of mining options and they have got their business well and truly in order. They are in the fortunate position where they can talk about relatively small capital expenditure to extract large gains out of their existing business. That's great for them. But you can't compare a brownfield expansion with a greenfields one. WMC is certainly not saying they (the PAL projects) won't work. I think their view is let's sit back and see what the second generation brings.
MNN: What is your confidence level on the second generation of projects given that bonds where used to finance the first wave and their rates of return have been nowhere near forecast? KH: The second generation of projects will certainly be able to capitalise on what has happened the first time around. And an example of that is not only equipment selection and design but also the fact that the manufacturers have learnt a lot as well. So you can buy things off the shelf now that you know will work. That will help the ramp-ups. Nevertheless there are a number of needs for the second-generation players. They will need to have relatively high-grade deposits because you need to have good returns while you are ramping up.
MNN: What do you describe as high grade? KH: I think better than 1.5% Ni into the autoclave. Look at Goro in New Caledonia, which runs at about 1.6% which is good, the Ravensthorpe project (in Western Australia) which can be beneficiated up to 2%. That's the sort of deposit.
The other thing they will need is a major partner. The first wave of projects was developed by outfits with small balance sheets. The second generation projects will need a big partner for the banks to be comfortable.
MNN: Is there a certain output size that is necessary? WMC often pokes fun at Cawse and Bulong for being what they call 'overblown test plants'? KH: Long term you are looking at least 30-40,000 tonnes per annum of nickel. That's the size I regard as a minimum over a 20-year mine life.
MNN: So having said that what is the future for Cawse? KH: With Cawse the philosophy was always to build a commercial plant, treat the high-grade ore first, that included the high-grade cobalt, get some cash flow and prove the process and then move to expansion. Anaconda is now running that program and they have plans on the board for an expansion at Cawse up to, as I understand it, about 50,000tpa. And there is plenty of resource there and you can beneficiate the ore - so that's their future.
MNN: Does it surprise you and/or concern you that Anaconda puts its foot on anything that moves in Australian laterite industry? KH: No it doesn't surprise me. It's been their philosophy all along.
MNN: But speaking with your QNI hat on, are you wanting to lock down more resources or projects or are you happy with what you've got? KH: I can't really comment on that, other than to say that QNI has a strategy of becoming the world's fourth biggest nickel producer within the next four to five years. We are looking at sulphide and laterite projects. We want good quality projects.
MNN: Are the laterite miners competing against themselves or the sulphide miners or both? KH: The general view of the industry, and Inco is included, is that pressure acid leach projects will and are here for the long term. Looking simply at the dynamics of the market you need a project the size of a Murrin Murrin every year to meet growing nickel demand worldwide. There isn't the physical sulphides in the world available to do that, so it has got to come from somewhere. There are some deposits good for ferro-nickel but they are specialist projects. Which means PAL is here to stay. PAL is here for the long term.
Comet happy to take the money and run Sinéad Mangan 09 March 2001 A BIRD in the hand is worth two in the bush - that's Comet Resources chairman Roj Jones' take on the company's sale of its half of the Ravensthorpe nickel laterite project to Billiton for $28 million cash.
As a major shareholder in Comet (9.39%), Jones stands to make in excess of $3.5 million from the sale as the company will divide sale proceeds amongst shareholders at more than 50c per share.
If the deal wins shareholder approval, Billiton via QNI has effectively secured full control of the best of the second-generation laterite projects for $61 million plus a 19.99 % direct equity stake.
So why after five years of hard work did Comet decided to sell Ravensthorpe? Jones cites a nervy nickel laterite market and the difficult task ahead of raising its half of the $720 million needed to make Ravensthorpe fly.
"It appears that we have bitten off a project that's a little big for a company of our size," he said.
"As we moved towards the pointy end of raising finance, of which Comet would raise about $120 million in equity in the market and the rest would be borrowed, we had to look at our options. Remember we are talking about a small company that has a market cap of about $30 million. Laid over that was a perceived poor performance of nickel laterite projects in the market making debt and equity providers nervous and putting more pressure on us to realistically raise the money.
"We decided this was the best decision for shareholders, as opposed to a project where realistically it will be three years down the track before anyone sees any value."
Given Comet pumped $25 million into the project, $28 million does not seem a great deal for a resource the size of Ravensthorpe - it has the capacity to deliver 35,000 tonnes of nickel and 1300t of cobalt. But Jones said there has been a lot of water under the bridge with nickel laterites in the last five years.
"We had visions of making a lot more," Jones said. "Commercially QNI has been fair but they have not been overly generous."
CIBC World Markets resource analyst John McDonald said the agreed price for Ravensthorpe came as no surprise: "The benchmark was set when Comet sold 40% to QNI for $36 million. I can sympathise with Comet as the decision would have been very hard - if there was any fault it was with the original deal with QNI, which pretty much locked them in."
Jones confirmed that Comet chief executive Ken Hellsten would return to Billiton. Hellsten will take-up the position as QNI Western Australia general manager and managing director of Ravensthorpe, effective almost immediately.
"Ken is a top class project man," he said. "Given Comet will revert to being a small company with a small amount of cash it is obvious that with his skill base and his experience he would move with the project."
Once shareholders have approved the deal, Comet will have 61 million shares on issue (it currently has 74 million shares on issue of which QNI's 15.2 million share will be cancelled) and $3-5 million in the bank.
Comet has no major projects on the go apart from a couple of small joint venture operations in gold. Jones said once Comet's slate was clean it would pursue other projects, even perhaps a dot.com venture.
"Our skill base is obviously in resources," he said. "We don't want to close the door on anything and there are a number of technology-related opportunities that seem to be interesting at the moment."
The deal will be wrapped up in six to 12 weeks, according to Jones.
Comet's shares surged from its opening price of 49.5c today to a high of 53c but have faded back to its current trading price of 49c.
Jones said it would take awhile before the news sank-in in the market place.
Billiton considers putting brakes on Ravensthorpe Sinéad Mangan 19 April 2001
BILLITON executive director Mike Salamon said today the company might delay its decision on the $720 million Ravensthorpe nickel project in order to avoid problems experienced by rivals such as Anaconda Nickel.
The Ravensthorpe feasibility study would not be complete by its scheduled deadline of mid-2001, Salomon told journalists in Melbourne.
"We need to do the work very thoroughly," Salamon said. "We're going to put it through a very powerful microscope, probably three times more powerful than for other projects."
Earlier this year Billiton, via QNI, paid Comet Resources $28 million for the shares in Ravensthorpe it did not already own. Ravensthorpe has the potential to produce as much as 35,000 tonnes of nickel and 1300t of cobalt per annum.
Salamon said Billiton expects it will double its copper production to 500,000t of copper by 2005, assisted by the company's recent $1.7 billion takeover of Canada's Rio Algom as well as the anticipated output from the Antamina and Spence copper projects.
Speaking about the BHP-Billiton merger Salamon told journalists it was prepared for the good and the bad associated with a merger with the big Australian.
"I would say the dirty washing is out in the public domain," Salamon said. "We've made assumptions vis-à-vis Ok Tedi and we believe they are realistic assumptions."
BHP's wants to exit its 52% ownership of the Ok Tedi project in Papua New Guinea as soon as possible, but faces large environmental damage costs regardless of whether it quits. BHP's hot briquetted iron both in Venezuela and in Port Hedland, Western Australia, have both had their fair share of problems.
Salamon played down risks for BHP associated with Billiton's exposure to countries like South Africa, Mozambique and Colombia.
BHPB extends Ravensthorpe study Sinéad Mangan 29 August 2001
BHP Billiton has extended by nine months a study into the much vaunted $720 million Ravensthorpe nickel project in a bid to avoid the setbacks experienced by rivals such as Anaconda Nickel.
The deferral follows a 25% decrease in the nickel price over the past three months and uncertainty in the market about the ability of nickel laterite operations to generate attractive returns.
But BHPB put a different slant on its decision to defer the project yesterday, stating the merger between BHP and Billiton had provided new process opportunities for Ravensthorpe, including the "atmospheric pressure leach" process.
The company expects to finish the study in the final quarter of 2002, Ken Hellsten, president of BHPB's Western Australian nickel unit, said in a company statement.
Hellsten said the company "was mindful that we need to incorporate solutions to the technical lessons learnt by other nickel laterite projects".
"We believe that proper design, detailed engineering, extensive test work and careful selection of materials are the keys to success with this style of project," Hellsten said. "A dollar properly spent now will save us a considerable amount in the long run."
The proposed Ravensthorpe/Yabulu project entails a nickel-cobalt hydroxide intermediate product from Ravensthorpe being shipped to the QNI Yabulu refinery in Townsville, Queensland, for further refining. Production at Yabulu will be expanded from the current 29,000 tonnes per annum nickel to nearly 70,000tpa to accommodate the additional feedstock.
BHPB picked-up the remaining 50% interest in Ravensthorpe from Comet Resources for $28 million earlier this year.
BHP Billiton to begin trial mining at Ravensthorpe nickel Stephen Bell 05 June 2002
BHP BILLITON will begin trial mining this month at the Ravensthorpe nickel project in Western Australia as the company moves towards completion of a US$30 million feasibility study by next March.
BHPB has awarded a contract worth around $1 million to Macmahon Holdings to mine roughly 100,000 tonnes of ore from Ravensthorpe's Halleys deposit over a two-month duration.
Ken Hellsten, president of BHPB's Western Australian nickel operations, said the purpose of the trial mining is to understand any "short-range variability" in the laterite ore.
The company wants to know how easily the ore digs, its crushing characteristics and blasting patterns.
BHPB's current mining costs assume that 80% of the deposit will require drilling and blasting.
"We're hoping to reduce that number," Hellsten said.
The company will also investigate how "sticky" the ore becomes when wet.
In the current trio of laterite mines, developers focussed most of their efforts on the technically complex pressure acid leaching circuits.
They assumed the front-end process, including mining, would be straightforward.
But Hellsten says some of the projects have had handling problems, due to sticky ore.
"The lesson is don't take anything for granted," Hellsten said.
"Ravensthorpe's ore may be sticky from time to time," he said.
"We want to see how it behaves so we can design the plant appropriately."
The mining exercise follows a series of successful test runs on Ravensthorpe ore at BHP Billiton's pilot plant in Perth.
The runs have produced "better than expected" results, Hellsten says, particularly in relation to the company's proposed use of "atmospheric leaching" (AL) for part of the deposit.
The latter seems to work well on the project's high-magnesium saprolite ore.
It will be used alongside more conventional pressure acid leaching on the lower magnesium limonite ore.
Hellsten said the test runs have shown that the inclusion of AL in the flow sheet provides a more "robust" project to put before BHPB's board next year.
The A$1.3 billion project involves a new mine and processing plant at Ravensthorpe that will deliver an intermediate product to an expanded refinery at Yabulu in Queensland.
It will produce 45,000 tonnes per year in the first seven years, slipping to 35,000tpa after that.
The cash costs are estimated at around US$1.50 per pound of nickel.
Hellsten insists Ravensthorpe will be only a "moderate" risk project, despite the financial disasters at Murrin Murrin, Bulong and Cawse.
Along with comprehensive pilot test work (something that wasn't done on the existing trio), BHPB intends to use better engineering and materials.
It also believes Ravensthorpe benefits greatly from the ability to upgrade its ore from around 0.9% nickel to as much as 1.9% in the first seven years.
The upgrade is via a screening process to remove quartz and other barren rocks prior to feeding into the leach circuit.
Some analysts are sceptical, however, that new BHP Billiton CEO Brian Gilbertson will choose to spend $1.3 billion on what is still perceived as a risky nickel laterite play.
Nickel is part of Stainless Steel, one of BHPB's smallest divisions.
Ravensthorpe would lift the company's output to around 120,000 tonnes per annum (starting in 2006), which would put it into a similar league to WMC.
Another option for BHPB is to snap up WMC's non-alumina interests if that company's demerger goes ahead later this year.
The addition of WMC's nickel division would make BHPB a significant global player in the metal.
Unlike commodities such as iron ore, BHPB also has plenty of room to "move" in nickel without bumping up against regulatory authorities.
The other option, of course, is for BHPB to sell out of nickel altogether.
Report: China's Jinchuan wants stake in Anaconda Greg Tubby 04 June 2002
CHINA'S Jinchuan Group is reportedly in talks to take a US$100 million stake in Australian laterite pioneer Anaconda Nickel.
"After looking at the material they provided us, we came up with three questions on the venture," Jinchuan vice-president Zheng Yusheng said at the conference China - Strategies for the Metal Industry, according to Reuters.
He said Anaconda had agreed Jinchuan had pinpointed key issues and promised to provide explanations in the second half of the year.
Jinchuan, China's largest producer of nickel and cobalt, accounting for more than 80% of the country's total output, has said it is looking for overseas investments, mainly sources of concentrate for its smelting business.
"The company produces 3.6 million tonnes of raw ore each year and our grade is running at 1.36-1.4%," Zheng was quoted as saying.
The Murrin Murrin nickel plant.
"Our smelting capacity is about 60,000t a year, but to reach that 60,000t capacity we need to source raw material from overseas."
Jinchuan is working on the second stage development of its mine in China's northwestern province of Gansu, but "in the interim [what] we want to do is look overseas to reach our full smelting capacity".
Anaconda is trying to renegotiate payment terms for its US$420 million debt with US bondholders, but the timing of final negotiations and their ultimate outcome remain unclear.
Anaconda executives were unavailable for immediate comment.
Jinchuan also has a memorandum of understanding with Australian biotechnology company Titan Resources, which has developed a bacterial leaching process to recover nickel from sulphide ores.
SEARCH
Anaconda denies Chinese connection Greg Tubby 05 June 2002 ANACONDA Nickel has denied reports it is in talks with China's Jinchuan Group about buying a US$100 million stake in the company.
A spokesman for Anaconda refuted comments attributed to Jinchuan vice-president Zheng Yusheng, who told a conference the Chinese group expected Anaconda to respond to its request for detailed information in the second half of the year.
The spokesman admitted talks had been held last year with Jinchuan, China's largest nickel and cobalt producer, but said there had been no discussions since Peter Johnston replaced Andrew Forrest as Anaconda's chief executive.
Anaconda owns 60% of the Murrin Murrin nickel-cobalt operation in Western Australia, with its major shareholder Glencore holding the remaining 40%.
It is in the middle of crucial negotiations with secured creditors about restructuring its debt and recapitalising the company.
31/May/2002
IF YOU thought you heard the sound of logs rubbing together overnight, you're not going mad. The noise was coming from Canada where one of the longest-running logjams in the mining world sounds like it's about to break, unleashing the giant Voisey's Bay nickel project.
Three items of evidence point to a breakthrough in the impasse between Inco, the project owner, and the government of Newfoundland and Labrador.
First came a report that nothing was happening. This was curious and, at first glance, just another negative on Voisey's Bay. The provincial government, according to media reports, was refusing to budge on its demand that Inco build a processing plan rather than haul the ore for treatment at its existing operations.
But a closer reading of what seemed just another belligerent swipe at Inco revealed a new twist in the argument. The issue was not so much about whether Inco would build something substantial in Newfoundland, but when.
Then came news from Ottawa that the Canadian federal government was within days of approving C$100 million in aid for Inco to construct an experimental smelter and hydrometallurgical process system for Voisey's Bay ore.
Last night came the third pointer, a research report from a Canadian broking house which said a deal between Inco and the provincial government was in the bag.
Griffiths McBurney & Partners told clients that an agreement in principle had been reached with the deal to be locked up by the end of June.
So confident are the brokers that the pieces of the Voisey's Bay puzzle are falling into place that they have increased their valuation of Inco stock by 30% to US$29.75 a share.
The sequence, to an outside observer, looks like this. The company and the provincial government have reached a broad deal which will involve a value-adding processing stage for Voisey's Bay ore at the mine site. Inco, pleading that this is a cost it should not have to bear, has secured the federal government handout.
Pulling the three parties into line, without anyone losing face, means that the province will not confirm anything until the federal money is in the bag, and Inco will not commit to a final feasibility study until the two tiers of government agree on their respective positions.
But, for financial markets there is now more smoke than ever coming off the Voisey's Bay fire with increasing confidence that the mine will be developed and come online within the next four years, probably at a start-up rate of around 50,000 tonnes of nickel metal a year.
The sequence will probably see minesite development in conjunction with the experimental smelter and the shipping of ore to Sudbury, or another Inco processing plant.
Griffiths McBurney says the deal will trigger a chain reaction of events, including a US$1.5 billion writedown of Inco's holding costs on Voisey's Bay, which originally cost it US$4.2 billion.
For the nickel market, the launch of Voisey's Bay may not be the threat it once was. Australia's laterite projects have failed to flood the market. New laterite projects, including BHP Billiton's Ravensthorpe mine, are effectively on hold, and expansion of nickel mining in New Caledonia is moving slower than expected.
The end result is that the world's nickel miners are wiser to the dangers of over-supply and will stagger their development options to ensure a stable world nickel market pricing structure.
AEX Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
