First Nickel plans to restart its Lockerby mine, return it to production late next year and continue working toward a goal of becoming a mid-tier base metal producer.
“First step is Lockerby, then it is hang on to your toque, because we’re moving ahead,” said Gerry Bilodeau, vice-president of operations, for the $69.8 million project in the Sudbury camp.
“We are one of the few and unique TSX-listed companies with a development-ready, nickel-copper mine in North America. There are not a lot of those projects that are shovel-ready.”
The company hopes to be in commercial production by the end of 2012, contingent on financing of a $30-million loan from French and Australian banks. That money is earmarked for a capital expansion to extend a ramp and upgrade some surface and underground infrastructure. The company already has $29 million in its coffers.
Bilodeau presented First Nickel’s development project to a packed house of mining suppliers in Sudbury in Januar. He described the former-producing mine as a low-risk brownfield project that, once up and running, will have a 6.5-year mine life with potential for growth.
At full production, the operation will employ about 120 employees.
Born and raised in Timmins, Bilodeau came to First Nickel in 2007 with an extensive mine managing background with Falconbridge, which owned the Lockerby Mine prior to First Nickel’s $8-million purchase in 2004. Located in the southwest corner of the Sudbury Basin, the mine operated for 28 years, leaving a ready-to-mine ore body Bilodeau described as having world-class grades and mineability.
Between 2006 and 2008, First Nickel mined about 9.4 million pounds of nickel and 6.1 million pounds of copper. After the global financial crisis, the mine was put on care and maintenance. It has proven ore reserves down to the 7200-foot level. In 2009, the company completed a full feasibility study based on nickel prices at $9 per pound.
Bilodeau said an experienced, committed operating team with a “can-do” attitude has been in the process of bringing the mine into production, which will be based on 800 tonnes per day, or approximately 280,000 tonnes per year.
The mine’s reserves are 1.4 million tonnes at 2.23 per cent nickel, 1.36 per cent copper and 0.083 per cent cobalt. Projected yields from 2011 to 2016 are 52 million pounds of nickel, 34 million pounds of copper and 1 million pounds of cobalt.
Recommissioning work began late last fall. The capital expansion project consists of extending the ramp from the 6500-3 foot level to the 7000-foot level. Other work which will improve efficiencies is the construction of an underground maintenance shop, improved delivery of backfill through boreholes from surface down to the 40-foot level, and the automation of ore handling systems. Upgrades to the ventilation, conveyance and pumping systems are underway. As well, some of the mobile equipment is being refurbished.
The ore body is open at depth. Bilodeau said previous drill results show it extends beyond the 7200-foot level. Further delineation definition drilling will help determine what is down there.
Although the project is sensitive to the U.S. exchange rate, Bilodeau said with nickel being between $10 and $11 per pound., the project is cash positive. This would provide a good stepping stone to move forward with other projects.
The West Graham property, of which First Nickel owns 70 per cent, is a nickel/copper deposit southwest of Sudbury. It has a 43-101 resource estimate of 0.45 per cent nickel, and 0.31 per cent copper at 8.5 million tonnes. Two grassroots projects located in the province’s Bancroft area are the Raglan Hills and Belmont projects. Both are nickel/copper mineralizations described as a Voisey’s Bay style of ore body that the company has been exploring for two years.
“Our vision is to have three projects or operating sites in the next five years,” Bilodeau said.
As First Nickel moves its Lockerby Mine into production, it will continue to work aggressively toward its objective of becoming a mid-tier producer.
