Toledo welcomes European Nickel

The Directors of Toledo Mining Corp report that the boards of Toledo and Atlas Consolidated Mining and Development Corp have formally waived their direct and indirect pre-emption rights of first refusal with respect to the sale by Investika (now named Natasa Mining) of its 18.7% interest in Berong Nickel Corp (BNC) to European Nickel pursuant to the September 2004 BNC Shareholders’ Agreement and Clause 14.9 of the January 2005 BNC Venture Agreement. European Nickel hopes to conclude the transaction within two business days of June 27, subject now only to Investika shareholder approval of the transaction at a shareholder meeting to be held on that date. This paves the way for European Nickel to own an overall 19.3% interest in Toledo and an 18.7% direct interest in Berong Nickel Corp.

The entry of European Nickel is seen as positive and is warmly welcomed by both Toledo and Atlas, and will enable Toledo to quickly leverage off its large laterite resource base (approximately 375 Mt at an estimated grade of 1.3% Ni) and accelerate the commercial development of one or more of the value added processing options currently under study. European Nickel has leading edge experience in heap leaching of laterite ores, whilst Toledo has undertaken extensive metallurgical testing and studies on agitation atmospheric leaching and high pressure acid leaching. Combined, these cover all the acid leaching technologies currently available for laterite nickel ores.

Recognising the potential contribution of European Nickel to the commercial development of Toledo’s nickel resource, European Nickel has been invited to nominate two directors to the Toledo Board. Notwithstanding this invitation and the large shareholding of European Nickel, Toledo will continue to operate and function as an independent company to ensure the interests of all shareholders are maintained. Enhanced corporate governance, through the planned addition of new independent directors, and an independent Chairman, will also help considerably in this area. The current Chairman, Chris Kyriakou will resign and leave the Board on the successful conclusion of the transaction. 

Berong Nickel has been direct shipping laterite nickel ore to Australia and China for the past 15 months. In 2007, approximately 530,000 t (wet) of laterite ore at an average grade of 1.53% Ni were mined and shipped. In 2008, approximately 190,000 t (wet) of similar nickel grades have been shipped notwithstanding the very wet weather conditions during the first half of the year. Considerable efforts are being exerted to maximise production using the existing facilities already in place. Internal estimates suggest up to 1 Mt (wet) can be mined and hauled before the need to build the Dangla Road at which time production and hauling capacity could more than double.

At the Ipilan Project, approximately 80,000 m of drilling and test pitting has been carried out over the last two years to establish the geological resource. Internal estimates suggest mineralization of over 100 Mt of laterite ore at an estimated grade of around 1.25% Ni. Snowden Mining Industry Consultants is currently preparing the JORC compliant report which should be ready for release in the third quarter.  Studies continue on the development of a ‘Direct Shipping Operation’ to complement the ore currently being shipped out from Berong. The Ipilan project is located on the east coast of Palawan and will therefore benefit from year round shipping.

Strategically, the long term future of Toledo rests with value added processing where laterite ore is processed on site. To this end, considerable metallurgical test work has already been undertaken on representative ore samples from both Berong and Ipilan. All test work has been carried out in Perth by SGS-Lakefield Oretest under controlled conditions. The test work results from heap leaching, agitation atmospheric leaching, and high pressure acid leaching (HPAL) (including combinations of all three) formed the basis of the preliminary flow sheet designs and the ‘order of magnitude’ capital and operating cost estimates undertaken by SNC- Lavlin Australia for processing plants of 20,000 to 40,000 t/y nickel in mixed hydroxide product.

The results of the metallurgical test work have been excellent with very high dissolution rates for both nickel and cobalt over short periods of time. As expected, results vary by technology-

Heap Leaching: Ni and Co extraction greater than 75%

Agitation Leaching: Ni and Co extraction of greater than 85%

HPAL: Ni and Co extraction of greater than 95%

European Nickel is proceeding rapidly with the test program on Berong ore at its test facility near Subic Bay in the Philippines. The results from this program will enable the company to make a decision on which process route is to be adopted.

In addition to leaching, the company is also assessing the electric arc furnace process for treating laterite nickel ore in the Philippines. The electric arc furnace process is relatively low cost compared to the blast furnace process and can produce a higher grade ferro-nickel product (nickel pig iron), which is better accepted by the market place. 

Negotiations continue with several Chinese companies who are very keen on entering into a Joint Venture to develop a leach processing plant based on the large Ipilan resource already defined. An MOU is expected to be finalised early in the third quarter.

George Bujtor, CEO of Toledo commented, “Toledo sees value added processing as the future of the company, with the direct shipping business viewed as a valuable adjunct. Whilst we have already undertaken considerable metallurgical test work on our own, the incorporation of process knowledge and understanding by European Nickel, subject to intellectual property rights, can only enhance the impressive results we have already achieved. The interest in Toledo shown by European Nickel is a compliment to the dedicated work undertaken by the whole team. I welcome European Nickel as a major shareholder of Toledo and look forward to working together on advancing our projects”