interesting article on alb Munali Nickel project seen as great...

interesting article on alb Munali Nickel project seen as great story for investors
By: Tessa Kruger
Posted: '07-DEC-06 08:00' GMT © Mineweb 1997-2006

JOHANNESBURG (Mineweb.com) --Albidon managing director Dale Rogers believes strongly that nickel demand will continue to exceed supply for several years as the industry has not succeeded in making many discoveries over the years.

Rogers told Mineweb, shortly after Albidon signed an offtake agreement with China’s top nickel producer, the Jinchuan Group, for its Munali Nickel project in Zambia, that the industry has not adequately responded to demand for nickel.

He said this fact dated back to the mid-90’s when investment in exploration was insufficient. Although miners recently started spending more on exploration for nickel, these efforts have not yielded good results.

Munali, located approximately 60km south of Zambia’s capital Lusaka, is one of the few nickel sulphide deposits due to be developed in the near to medium term. The project is expected to produce 8,500 tonnes per year of nickel in concentrate after a ramp-up period in 2008.

Rogers said that platinum group metals (PGMs) that will be produced as by-product of nickel would add significant value to the project.

The project, demanding investment of approximately $65 million, has a mineral resource of 109,000 tonnes of nickel and 223,000 ounces of platinum group metals.

Rogers describes Albidon’s most advanced project as “a great story for investors” as the company will continue to appreciate in value as the project evolves.

“We are moving ambitiously towards production and cashflow – nickel prices are at record highs and we want to take advantage of that.”

Albidon reached an offtake agreement with the Jinchuan Group earlier this week that includes US$20 million of funding for the development of the project.

Rogers said that Albidon would leverage its relationship with China’s largest producer of nickel, cobalt and platinum group metals in future, although the company did not have any joint ventures with Jinchuan in Africa yet.

Albidon has found Zambia to be a stable environment where the minimal red tape applies.

The country offers incentives such as reduced royalty rates to mining investors, while the greatest attraction was the efficiency of government approval processes.

The Munali project area comprises the Enterprise Deposit and a number of other nickel prospects in the Munali Intrusion, of which the most advanced is the Voyager prospect to the north of Enterprise.

A “positive” bankable feasibility study was completed in July this year and site works started in September after US$35 million of equity finance was raised for the project.

Albidon said the implementation programme for Munali would now be accelerated with the appointment of senior lenders to provide bank debt finance for the project, site preparation, placing orders for major items of equipment and drilling of additional water bores to provide construction water and to assist in dewatering near-surface portions of the mine.