TVI Pacific Inc. and TVI's Philippine affiliate, TVI Resource Development (Phils.), Inc., have announced that Agata Mining Ventures Inc. is modifying its high-iron/low nickel direct shipping ore operations to include shipments of ore containing higher nickel content to maximize revenues at the Agata nickel laterite project located in northern Mindanao, the Philippines.
AMVI, a joint venture company in which TVIRD holds a 60% interest and is the operator, has also commenced a detailed exploration program aimed at upgrading the previously defined nickel laterite resource and to identify additional resources at the project.
"We are pleased to see AMVI adjust its DSO operations in light of current depressed nickel laterite prices to maximize revenues and achieve healthier operating margins," stated Mr. Cliff James, Chairman and CEO of TVI and Chairman of TVIRD. "Additionally, while carrying out its DSO operations, AMVI has found more nickel laterite ore than was previously identified at the Agata project. As such, a thorough drilling campaign on the Agata nickel laterite orebody has commenced to better understand the project's resource potential."
Modified DSO Operations
AMVI's original DSO operational plan at the Agata nickel laterite project was to ship approximately 55,000 wet metric tonnes (wmt) of high-iron/low nickel DSO grading a minimum of 48% iron and 0.6% nickel approximately every three to four weeks upon commencement of operations. To date, two shipments have been completed and a third shipment is nearing completion. However, current market prices for nickel laterite ore containing 0.6% to 0.9% nickel and 49% iron have fallen to US$13 to US$15 per tonne from an average price of US$21 to US$23 per wmt in the earlier part of 2014 and all of 2013, which has impacted operating margins.
To offset the price drop, AMVI now plans to mine higher grade saprolite ore (containing greater than 1.5% nickel) found in the deeper part of the nickel laterite orebody and make two 55,000 wmt shipments of the ore in the near term, as current market prices for nickel laterite ore containing 1.5% nickel is between US$38 and US$40 per wmt. Following the shipment of the higher nickel grade saprolite ore, AMVI plans to mine and make shipments consisting of both high and low grade ore in order to ensure that a blended higher selling price is obtained.
AMVI management is also implementing operation-wide cost-saving measures and is planning to ramp up production to further enhance operating margins.
While it has been AMVI's intention to process higher grade saprolite ore at a proposed nickel processing facility on-site (as announced in news on November 24, 2014), AMVI believes that there will be sufficient saprolite ore remaining when the process plant is commissioned and that additional saprolite ore may be identified through the aggressive drilling program currently underway at the project.
Exploration Program Underway
In October 2014, AMVI commenced a detailed exploration program consisting of in-fill, data verification and step-out drilling on the Agata nickel laterite orebody to define ore extension within and outside the current pit design and to upgrade and increase the resources previously disclosed in a National Instrument (NI) 43-101 compliant mineral resource estimate released on April 10, 2013.
The in-fill drill program consists of a total of 494 diamond drill holes, ranging in depth from 15 to 20 metres, totalling an estimated 7,904 metres. To date, 93 holes have been completed and results have yielded significant intercepts of up to 2.3% nickel and 52.5% iron (a full table of drill results is available on TVI's website as a PDF link to this news release). Results of the in-fill drill program will be used to upgrade the mineral resource estimation at the project.
Concurrent with in-fill drilling, a 143 twin hole drill program consisting of coring and auger drilling is underway for data validation of the holes previously drilled by Mindoro Resources in 2010. A total of 52 auger drill holes have been completed to date and initial assay results on samples show higher nickel and iron grades as compared with previous drill data. In addition, thicker saprolite horizons have been intercepted during the drill campaign, indicating a potential increase in volume and grades of the current resource. Due to the variability of the deposit, full results of the twin hole drill program will be announced upon completion of the program.
While both in-fill and data verification drill programs are being carried out at the west and south pit of the Agata North portion of the orebody, AMVI is also planning to carry out a step-out drill program aimed at defining ore extensions outside the pit design and to assess the potential of satellite laterite deposits mapped at the southern areas of the project.
Reconnaissance mapping will be carried out to locate areas of possible drill targets for the step out program, which will be finalized once ground assessment and drill target definition are complete. Further details and results of the exploration programs underway will be reported in the upcoming months.
AMVI intends to produce a NI43-101 compliant resource update on the Agata nickel laterite project upon completion of the drill program which is expected by mid-2015 or sooner.
Production Ramp Up
AMVI is currently planning to ramp up its nickel DSO operations from the previously stated goal of 2.5 million wet metric tonnes per year to 5 million wet metric tonnes by 2016 once it secures an amended and expanded Environmental Compliance Certificate and Declaration of Mining Project Feasibility with the Department of Environment and Natural Resources.
By doubling initially planned production capacity, AMVI expects to achieve economies of scale that would significantly enhance operating margins. Once production has been fully ramped up, the resulting shipment schedule would be approximately one to three shipments of 55,000 wmt of DSO being dispatched every week.