Positive results for Scandinavian Minerals

Scandinavian Minerals has completed its pre-feasibility study for the company’s Keivitsa nickel-copper-PGE property in Finland. The study shows highly attractive economics at prices considerably below those prevailing today. The capital cost is estimated at $110 million with a cash operating cost is of $1.36/lb nickel, net of by-product credits. At $12,500/t ($5.67/lb) nickel, less than half the current price, the international rate of return is 30.4% and the net present value is $281 million.

The pre-feasibility study was based on an open pit mining operation producing 4.5 Mt/y, with production of separate nickel and copper concentrates for sale to smelters in Finland or abroad. The study assumed a conservative base case using prices of $4.68/lb ($10,319/t) nickel and $1.21/lb ($2,668/t) copper.

Of the previously announced 70 Mt measured and indicated resource, the pre-feasibility study has placed 66.8 Mt into the proven and probable reserve category, giving a mine life of 15 years. At its deepest point, the open pit has a depth of 330 m. The average strip ratio over the mine life is 2.34.

The company expects to apply for the mining and environmental permits for Keivitsa in the third quarter of 2006. Peter Walker, President and CEO of Scandinavian Minerals, commented "We are very pleased with the results of the pre-feasibility study, which shows that the Keivitsa project has highly attractive economics at prices far below those prevailing today. We expect that the infill drilling and metallurgical work currently under way will enable us to commence a full bankable feasibility study in early 2007."

Scandinavian Minerals is currently conducting a 10,000 m drill programme at Keivitsa. The purpose of the programme is infill drilling of the known orebody. In addition, the programme will provide additional material for metallurgical testing, as well as geotechnical data and orientated drill cores. The drilling is expected to be completed in August. The data generated by the programme may also lead to an increase in resources/reserves and, consequently, a potentially larger-scale operation. The company has also recently completed a bulk sampling programme on the property. The bulk sample (some 350 t) has been trucked to the mineral processing laboratory of the Geological Survey of Finland in preparation for a full pilot plant programme to start in September.The results of the pilot programme are expected in early 2007. Following receipt of the pilot plant results, the company intends immediately to commence a full bankable feasibility study, which is expected to take 12 months to complete.