By NICK STEWART
Richard Murphy, president of Sudbury-based Independent Nickel Corp., sees no shortage of comparisons between his company and the humble beginnings of resource giant Sherritt International, especially given their shared history in the Manitoba-based Lynn Lake project.
Then known as Sherritt Gordon Mines, Sherritt discovered and operated the Lynn Lake Nickel Mine from 1954 to 1976.
Nearly 30 years later, Independent Nickel is well on its way to taking the long-dormant property back into production, with a recently completed pre-feasibility study in hand and extensive exploration drilling underway.
“Things are looking very positive for us out there,” Murphy says.“We’ve got a very good understanding of the geology and we’ve got clear ideas on areas that hold high potential for new resource definition.”
With a 10.7-million-tonne mineable reserve, the mine is expected to have an 11-year mine life, producing roughly one-million-tonnes-per year with an average grade of 0.65 per cent nickel. This means production might reach a rate of 3,000-tonnes per day at the mine, which may come online as early as 2011.
To begin converting the remaining 9.6 million resource into reserves and extend the mine life to 20 years, the company is two-thirds of the way through a 20,000-metre drill program.
It has committed $2 million in expenditures over the next year, largely consisting of the drill program being undertaken at the site. Murphy says the mine life may actually extend beyond their already lofty expectations once they start taking a look below the existing mine workings, which reach to the 3,000-foot level.
In fact, all drilling to date by Sherritt and Independent Nickel has taken place above this mark, which is a relatively shallow depth compared to many 10,000-foot level projects currently underway in the Sudbury Basin.
Once the mine has been dewatered and the shafts rehabilitated, drilling may eventually begin below the previous limit set at the 3,000-foot level.
“There’s no reason to say that we wouldn’t have more mineralization once we start digging around the 3,000 to 6,000-foot area,” Murphy says.
The comparisons with Sherritt don’t end there, as the distant location of the Lynn Lake site long ago forced Sherritt to develop new innovations in metallurgical processing to keep refining costs down. Similarly, Independent Nickel is casting an eye towards an alternative processing system known as bioleaching, instead of relying upon contracts with external smelters.
Bioleaching is a process that involves using bacteria to eat away at the sulphide minerals to expose the nickel ores, and in some ways is not unlike bioleaching generators seen in rural septic systems.
This process is widely used in overseas mining operations, particularly in areas such as Africa and Europe, although it is scarcely used in North America. Murphy says this is due to many large producing companies already having access to established smelters. As a promising junior, however, Independent Nickel could benefit greatly from this particular system.
Making use of bioleaching stands to impact upon the company’s eventual operating costs, which are expected to be within the range of one per cent of the total value of the ore.
Unlike Sherritt, however, Independent Nickel will soon seek a partner to potentially take over operation of the property and share in the estimated $150 million pricetag associated with bringing the mine into production. This will allow the company to retain its focus as an exploration firm, Murphy says, while also helping to share in the $30 million worth of work that needs to be done over the next two years.
Another element which stands to bolster the company’s financial future is a three per cent royalty it has acquired on a Manitoba nickel deposit known as the Minago project. Held by Victory Nickel, the property is expected to begin nickel production in the fourth quarter of 2010. Murphy anticipates that this may generate as much as $74 million over a 16-year mine life at a modest projected nickel price of $7.40 per pound.
www.independentnickel.com
