understanding economic open pit nickel grades, page-8

Bit of info copied from IXR Thread on the upcoming demand for nickel to read while we wait if anyone is interested. I think it gives one the feeling how massive a game changer this will be for AVQ.

China is going to need 1+ MILLION tonnes more nickel before the end of this decade.
Rest of world led by Brazil, India, Russia will also need more
Current set of projects under construction, AT BEST, will only provide ~500,000 tonnes
or half of that amount
Little visibility on remaining 500,000+ tonnes the market requires in future
Potential to once again face significant supply shortfalls by 2015.16
Current set of projects under construction cleans out project cupboard¡¨
Significant cost and technical challenges associated with laterite projects result in
little appetite for new $5+ billion laterite projects
Few large scale greenfield exploration discoveries 35 years of underinvestment
NPI ultimately constrained by high grade ore availability and structural cost increases (power,
labour, currency) in China
By 2015.16, only a few new large scale projects, such as RNCs Dumont and First
Quantums Enterprise nickel sulphide projects, are expected to be ready to meet the
worlds growing demand for nickel

The bulk of the current wave of projects have been known for many decades: either
discovered/developed too late during the 1965¡V75 period or inferior to other projects
that were developed
Most of current project wave has sat in the cupboard¡¨ for many decades
(even back to the beginning of the last century)

Beyond 2015
The Cupboard is Bare Few new projects in project pipeline
Potential for primary supply shortfalls similar to 2005.2007 period,
additional NPI production to fill gap requires much higher nickel prices
than today
Potential for significant supply disruptions from Indonesia



Beyond 2015
Sulphides Can Help, but Most Projects Too Early
„X Simpler mine/mill operations rather than fully integrated smelting/refining
operations
„X Conventional mine/mill operations have a long track record.
Breakthrough by BHP Billiton (originally WMC Resources) at Mt. Keith in
processing ultramafic ores has now operated successfully for almost 20 years
Capital intensity a fraction of largest scale laterite projects
For examples, RNC Dumonts initial capital of $1.1 billion and $25 per tonne of
nickel output is a fraction of the $5+ billion and capital intensity of
~$90 per tonne spent at Goro, Koniambo, Ambatovy
Inherently, sulphide minerals require much less energy to liberate nickel than
laterites.