AFRICAN EAGLE RES ORD GBP0.01 : Dutwa Scoping Study indicates potential economic viability
06/24/2009 | 11:05am CEST
SCOPING STUDY INDICATES
POTENTIAL ECONOMIC VIABILITY
OF AFRICAN EAGLE'S DUTWA NICKEL PROJECT, TANZANIA
Feasibility study to begin immediately
* Draft Scoping Study indicates economic
viability of project
* Indicative life-of-mine pre-tax earnings
US$1.5 billion at nickel price US$7/lb
* Atmospheric tank leaching likely to be optimum
* Capital cost estimate US$435 million (2
million tonne per annum tank leach plant)
* African Eagle to begin feasibility study
African Eagle Resources today announces the results of a "proof of
concept" scoping study on the Dutwa Nickel Laterite Project in
Tanzania. The study was undertaken by GRD Minproc of Perth, Western
Australia, under contract to African Eagle.
African Eagle's Chairman John Park commented, "This study clearly
demonstrates that the Dutwa project can be economically viable. The
Company will now begin work on further feasibility studies. I also
believe that the implementation of GRD Minproc's recommended work
programme to investigate the potential to reduce capital and
operating costs and to improve revenues will demonstrate both the
robustness of the project and our ability to improve the project
For the study, GRD Minproc reviewed information provided by African
Eagle relating to the geology, resources, setting, mineralogy and
metallurgy of the deposit, and the infrastructure in Tanzania and
neighbouring countries. GRD Minproc used this information, combined
with its own internal data and experience, to develop mining and
process plant plans for ten alternative process options and to
calculate preliminary economics of each. The economic modelling was
an iterative process, feeding back into the mining plans and the
The study showed that the optimum process option is likely to be
atmospheric tank leach, but the project may also be viable using heap
leaching. High-pressure acid leach with direct solvent extraction of
the nickel is also potentially economically feasible.
Preliminary financial analysis indicates that the base case post-tax
net present value (NPV) of the best option is US$109 million and its
internal rate of return (IRR) is 14.5% based on a discount rate of
10%, a nickel price of US$7/lb and transport costs of US$100/tonne.
The NPV rises to $209 million and an IRR of 15.5% at an 8% discount
rate and $75/tonne transport costs. The equivalent pre-tax NPVs are
US$202 million and US$354 million respectively.
The results of this study fully justify commencement of further
feasibility studies on the project.
GRD Minproc modelled ten process options based on the deposit model
produced by SRK for the November 2008 JORC compliant resource of 31
million tonnes at 1.1% nickel and 0.034% cobalt. GRD Minproc used
Whittle mine modelling to optimise the mining plan and cut-off grade
for each process option, including a 50% upside to take into account
the nearby Ngasamo laterite, which potentially adds an additional
15-20 million tonnes.
The study determined that atmospheric leaching with production of
intermediate hydroxide or sulphide products is likely to be the
optimum process route, although heap leaching is also viable. High
Pressure Acid Leach (HPAL) with direct solvent extraction (DSX) and
electrowinning of nickel metal also appears to be viable.
The cost of reagents, especially sulphur and lime, is a major
component of operating costs and sensitivity analysis shows that
returns can be considerably increased if these costs can be
minimised. As anticipated, transport costs will be a significant
contributor to operating costs and ways to minimise these will be
investigated. For the atmospheric tank leach processing option, pre
tax NPV will increase by $50 million to US$252 million if transport
costs can be reduced to $US75/t against the base case of $US100/t.
GRD Minproc concluded that the results of the study justify
commencement of further feasibility studies on the project. Initial
work on this should be directed towards investigating variables which
could lead to costs reductions and revenue increases.
Specifically, GRD Minproc recommended that the following further work
* Resource drill the Ngasamo deposit
* Improve and upgrade the resource model, incorporating the
Ngasamo drill data
* Investigate beneficiation of the ore prior to leaching
* Conduct advanced metallurgical testing for tank and heap
* Investigate ways to minimise transport costs
* Investigate sources and costs of reagents, especially lime
* Investigate water balance at the project site
* Conduct a marketing study for the alternative products
* Complete an environmental impact assessment
* Conduct hydrogeological surveys
* Review power supply and co-generation options
* Review requirements and time frames for statutory permits
Additional metallurgical test work is currently being undertaken by
Mintek Laboratories in South Africa. This work includes column leach
test work, heap leach test work, sizing analysis and physical test
work to establish more definitively the optimum processing routes.
Resource definition drilling of the Ngasamo laterite deposit is
planned to commence in August.
A glossary of technical terms used by African Eagle in this
announcement and other published material may be found at
For further information:
+44 20 7248 6059
+44 77 5640 6899
Seymour Pierce Limited, London
+ 44 20 7107 8000
Russell & Associates, Johannesburg
+ 27 11 8803924
+27 82 8928052
Ed Portman / Leesa Peters
Conduit PR, London
+44 20 7429 6607
+44 77 3336 3501
About African Eagle
African Eagle is a diversified mineral exploration and development
company operating in eastern and central Africa. The Company's
principal advanced projects are the Dutwa nickel laterite discovery
in Tanzania, where the Company completed a scoping study in June
2009, and the Mkushi Copper Mines project in Zambia, for which a
draft Feasibility Study was completed in Q4 2008.
African Eagle has also defined a gold resource estimated at half a
million ounces at the Miyabi gold project in Tanzania, and is
evaluating a second promising nickel laterite deposit which it
recently discovered in Tanzania. The Company holds a well-balanced
portfolio of promising earlier stage gold and base metal projects,
including the Ndola and Mokambo projects in the Zambian Copperbelt.
Zambia, Tanzania and Mozambique, the sites of African Eagle's
projects, are all countries which have highly prospective geology,
relatively low above-ground risks and track records of successful
major investments in the metals and minerals industries.
African Eagle specialises in project generation and exploration. To
take its discoveries into production, it seeks to sign up industry
partners with records of successful mine development. These joint
ventures and, in time, the revenue from advanced projects, will
finance future exploration and new discoveries.
African Eagle has discovered a significant nickel laterite deposit
within the Dutwa project area, which lies in the Kilimafedha belt
(Swahili for "money hills") of the Lake Victoria Goldfield.
Operationally, the project is favourably situated, 100km east of the
railhead at Mwanza and close to the main Mwanza-Nairobi trunk road, a
major power line and the shore of Lake Victoria.
Greenstones and granites underlie the area. The greenstones, of
Archaean Nyanzian age, are mostly metamorphosed volcanic and
sedimentary rocks, with some banded iron formation in the east.
Several large ultramafic bodies intrude the greenstones and the
nickel laterites form a blanket up to 60m thick on top of these.
African Eagle has explored several prospecting licences in the Dutwa
project area, covering a total area of more than 750km². The Company
holds 90% interests, with options to acquire 100%, over the Dutwa
laterite deposit. In April 2009, African Eagle signed a Letter of
Intent for an option and joint venture over the Ngasamo licence,
which contains another nickel laterite 5km west of the Dutwa project.
African Eagle acquired the Dutwa project for its gold potential, but
its exploration team quickly recognised that there was significant
nickel laterite potential. Geochemical soil surveys carried out by
African Eagle over the whole of the project area identified a
promising 5km-long nickel anomaly and a number of gold anomalies.
There is very little outcrop, so the Company conducted extensive
ground magnetic surveys to reveal the underlying structure and
geology. The Company has also compiled historical data, including
detailed geological maps and trench results dating from 1956, when
rock chip samples from the trenches over the ultramafic rocks were
reported as yielding up to 1.9% nickel and 10% chromium.
To investigate the nickel anomaly, the Company undertook trial
drilling in June 2008. The results were very encouraging and a
139-hole reverse circulation (RC) drilling programme was completed to
delineate the resource. African Eagle also undertook a 10-hole
diamond drill programme to obtain core samples for metallurgical
testing and density measurements.
In November 2008, African Eagle announced an initial Inferred Mineral
Resource estimate of 31 million tonnes at an average grade of 1.1%
nickel and 0.034% cobalt. At a cut-off grade of 0.5% nickel, this
gives Dutwa a contained metal endowment of some 340,000 tonnes of
nickel and 11,000 tonnes of cobalt. The estimate was prepared by
independent consultants SRK Consulting (UK) Ltd in line with the
Australasian Code for Reporting of Mineral Resources and Ore Reserves
(the JORC Code). SRK classified the estimate as an Inferred Mineral
Resource in terms of the JORC code, but noted that the deposit is a
continuous mineralised body of simple geometry, which has been well
delineated by the drilling, and could be promoted easily to Indicated
category with more density measurements and improved knowledge of the
Ngasamo Hill, which lies 5km west of the Dutwa deposit appears
geologically very similar, probably holds a laterite deposit of the
order of 15 to 20 million tonnes, which would increase the global
resource at Dutwa from the currently defined 31 million tonnes at
1.1% nickel, to some 45 - 50 million tonnes. Drilling and
metallurgical tests will be needed to confirm the size, grade and
compatibility of Ngasamo, but first indications are very promising.
Under its agreement with Ngasamo's owners, (Safina a.s. of the Czech
Republic and its Tanzanian subsidiary Precious Metals Refinery
Company Ltd), African Eagle can earn an interest of 50% and up to 75%
in Ngasamo by carrying out exploration and evaluation work, up to a
The Company despatched mineralised drill core and RC chip samples to
Mintek Laboratories in Johannesburg for investigations into the
mineralogy and metallurgy of the deposit, especially tests of the
amenability of the material to sulphuric acid leaching. Mintek
carried out mineralogical characterisation by X-ray diffraction
(XRD), scanning electron microscopy (SEM) and polished section work,
to determine the nature of the ore body, and extended 'bottle roll'
acid leach tests on ten samples, to investigate metal recoveries and
The bottle roll test results show nickel extractions of 70-90% with
an average of 83%, based on assays of the samples prior to the test
and of the solid residues at the end of the test. Cobalt extractions
were mostly in the range 70 to 85%. The acid consumptions, averaging
209kg/t, are very low compared to other Ni laterite ores worldwide.
The mineralogical investigations show that the laterite is extremely
silica-rich, with low iron and magnesium content, indicating that
Dutwa is not a typical laterite nickel deposit. Mintek believes that
much of the nickel and cobalt occurs in "wad" with manganese content
of 20-60%, nickel content of up to 20% and cobalt content of up to
The unusual mineralogy of the deposit is beneficial, as it results in
lower acid consumption and would be likely to give good heap leach
permeability or favourable liquid-solid separation in tank leaching.
The concentration of nickel and cobalt in the manganese wad offers
possibilities that mechanical selection of high-grade material may
allow reduced throughput and hence a lower cost processing plant.
As the next step in the process, African Eagle commissioned a Scoping
Study to investigate the key operating parameters and to assess the
economic potential of the project. The results of the study became
available in mid-June 2009 and are described in the main news release
The Company has also completed a trial programme of RC drilling to
test a laterite at its Zanzui project, 70km to the south of Dutwa.
Results included 42m at 1.05% nickel (including 6m at 2.80%) and 33m
at 0.91% nickel (including 9m at 1.41%).
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