Drilling confirms added resource potential at Weda Bay’s nickel project

Canadian mining company Weda Bay Minerals Inc. said on Tuesday early drilling results from Santa Monica prospect at its laterite nickel project on Halmahera island indicated a potential to increase resources exceeding expectation.

The company said in a statement that the scope of the current drilling program is aimed at increasing the resource base at two of the main deposits, Santa Monica and Pintu. The two deposits together account for over 40 percent of the total project resource base which currently stands at 133 million tons grading 1.37 percent Ni and 0.11 percent Co of measured and indicated resources plus 82 million tons grading 1.33 percent Ni and 0.12 percent Co of inferred resource.

At Santa Monica, said the company, an initial survey to define additional drill hole locations has demonstrated that the undrilled areas of nickel and cobalt rich laterite are far more extensive than previously contemplated. As such, in excess of twice the number of planned holes will now be drilled and it is expected that this will lead to a significant increase in the estimated resource at Santa Monica. The current measured and indicted resource at Santa Monica is 46 million tons of 1.32 percent Ni and 0.12 percent Co plus an inferred resource of 25 million tons of 1.39 percent Ni and 0.05 percent Co. Santa Monica has been selected as the initial source of feed for the Company's proposed nickel cobalt project and so any additional resource will further enhance project's economics.

Drilling has re-commenced at the Santa Monica deposit with over 40 holes completed to date showing laterite thickness of up to 25 meters. Four drill rigs are now operating around the clock with a further 100 holes planned for Santa Monica, for a total of over 1,250 meters of drilling expected.

The company said Pre-Feasibility Study on Halmahera project indicates production scenario of 60,000 tons per annum of nickel and 5,000 tons per annum cobalt in an intermediate product. The capital cost is estimated at US$902 million. The project has an Internal Rate of Return of 35 percent on a 60/40-debt equity basis at a nickel price of US$4.00/lb and cobalt price of US$10.00/lb. At these metal prices the average annual project earnings before taxes, interest and depreciation are in excess of US$300 million.

Weda Bay Minerals Inc through its subsidiary PT Weda Bay Nickel owns 90 percent of the project while state miner PT Aneka Tambang holds the remaining 10 percent stake. (alex)