Weda Bay says financial analysis on Halmahera nickel project encouraging

Toronto Stock Exchange-listed nickel miner Weda Bay Minerals Inc. announced Wednesday it had completed financial analysis on its nickel-cobalt project in the island of Halmahera, North Maluku.

?Results show that the estimated return on investment exceeds the Company's objectives. For a full equity funded scenario the Internal Rate of Return (IRR) is 16.2 percent with a Net Present Value (NPV) of US$ 380 million at a 10 percent discount rate. For a geared scenario with 60 percent debt and 40 percent equity the IRR increases to 24.0 percent with a NPV of US$ 435 million at a 10 percent discount rate,? said John Lynch, Weda Bay Minerals president and CEO in a statement.

Metal prices in both financial models are US$ 3.00 and US$ 10.00 per pound for nickel and cobalt respectively which are generally considered in the industry to be acceptable long-term prices for the respective commodities, said Lynch

All production of a sulphide intermediate product is assumed to be sold in accordance with the terms of the Product Sales Agreement with OM Group.

Weda Bay recently announced the completion of an independent Pre Feasibility Study (PFS) for a nickel-cobalt project based on its extensive laterite deposits on Halmahera Island. The proposed mine and processing facility would produce an average of 60,000 tonnes of nickel and 5,000 tonnes of cobalt over a 20-year project life.

The estimated capital cost is US$ 902 million inclusive of contingency and owners costs. The average operating cost is estimated to be US$0.78 per pound of nickel in a mixed sulphide intermediate product, exclusive of cobalt credit.

Metal prices in both financial models are US$ 3.00 and US$ 10.00 per pound for nickel and cobalt respectively which are generally considered in the industry to be acceptable long-term prices for the respective commodities. All production of a sulphide intermediate product are assumed to be sold in accordance with the terms of the Product Sales Agreement with OM Group.

? Weda Bay is very encouraged with these results and is now investigating various alternative financial structures, including additional partners, as a means to reduce the project risk for this large capital investment,? said Lynch.

Weda Bay owns 90 percent stake at PT Weda Bay Nickel, which operates the giant nickel and cobalt prospect. The remaining 10 percent stake is held by state miner PT Aneka Tambang Tbk. (alex)