Munali Nickel Project, Zambia

The Munali project sits about 60km south of Lusaka in southern Zambia. It is wholly owned by Australian company Albidon Ltd, and currently consists of two deposits – Enterprise, also known as Munali Phase 1, and Voyager. Although it is billed as a nickel project, Munali also contains commercial quantities of copper, cobalt and platinum group metals (PGMs).

Development began in September 2006 following a positive feasibility study and gaining the necessary government permits and approvals. Production of ore for the ten-year project started in March 2008, with first concentrate being processed for stockpiling in late June 2008.

The project is said to be one of very few new nickel sulphide developments planned worldwide in the next few years, and is expected to have a final direct cash operating cost of about US$3 per pound of nickel in concentrate.

Munali is costing $125m in capital and about $25m in working capital and mine development, and has been funded by a mix of debt financing and equity.

Up to $80m of senior debt has been provided by Barclays Capital and the European Investment Bank as joint lead arrangers for the project; the Jinchuan Group, of China, has provided an extra $20m in subordinated debt.

The equity funding consists of $40m raised from Albidon shareholders, $15m from the Jinchuan Group and $10m from ZCCM Investment Holdings plc. The Jinchuan Group has a life-of-mine offtake agreement with Albidon for Munali, and its share of the funding is part of the agreement.

Geology

The deposit is of the "gabbro-hosted" class of nickel sulphide deposits and, as such, the geology and style of mineralisation are broadly similar to that of other gabbro deposits such as Tati in Botswana and Sally Malay in Australia.

Albidon's geologists believe that the mineralisation is associated with mafic to ultramafic intrusions that have been emplaced along major regional faults, with the type example being the Munali Gabbro intruded along the Munali Fault.

Resources

The latest total indicated and inferred resources for the deposits, at a cut-off grade of 0.6% nickel, are 10.3Mt at 1.2% nickel, 0.2% copper, 0.07% cobalt, 0.6g/t palladium and 0.3g/t platinum. This amounts to a current metal inventory at Munali of 123,500t of Ni and 246,800oz of PGMs.

Production

Following an initial ramp-up period through 2008, annual production is scheduled to reach full capacity by early 2009, when it will consist of 10,000–10,500t of nickel, 1,650t of copper, more than 480t of cobalt and 18,000oz of PGM from the 1.2Mt/annum underground Enterprise mining operation.

The ore is processed through a conventional flotation concentrator that consists of a simple crushing and grinding circuit, rougher, scavenger and cleaner flotation cells, followed by concentrate and tailings thickeners. The end product is a nickel-copper-cobalt-PGM concentrate which is sold to Jinchuan Group for smelting. Albidon recorded its first revenue from the sale of Munali concentrate in October 2008.

The water supply for the project comes partly from an onsite borefield. Also, groundwater inflow into the mine is pumped to the surface storage system for use in the processing plant, and water used to pump tails to the tailing storage facility is returned back to the processing plant for reuse.

Albidon has agreed a ten-year power supply deal with Zambian utility Zesco, in which a 25km, 33kV overhead power line has been built from the hydroelectric substation in Kafue. The average running load for the plant and the mine is estimated at 5MVA.

The principal mining contractor was Byrnecut Mining International Ltd, of Australia.