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DAILY NEWS Jun 11, 2008 4:16 PM - 0 comments

Kola Mining reports 1.9 billion lb nickel resource

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Kola Mining's (KM-V, MKNFF-O) shares jumped 41% to 32.5¢ a share today following news that the junior's Souker project in Russia has a National Instrument 43-101 compliant resource of 1.97 billion lbs. of nickel.

The Vancouver-based company reported that at a cut-off grade of 0.131% nickel, Souker's indicated resource totals 103 million tonnes grading 0.26% nickel (for 590 million lbs nickel metal) and 0.06% copper (for 132 million lbs copper metal).

It also has an additional inferred resource of 261 million tonnes grading 0.24% nickel (for 1.38 billion lbs nickel) and 0.06% copper (346 million lbs copper).

The resource estimate incorporated Soviet-era drilling as well as drill results from Kola's 2007-2008 drill program up until May 15.

The Souker project is about 180 km west of Murmansk in the northwestern corner of the Kola peninsula. The peninsula lies within the Pechenga nickel belt, one of Russia's major nickel producing regions.

The property is strategically located between two smelters: the Norilsk nickel smelter 12 km to the west of the property in the city of Nikel and a locally owned smelter 14 to the east in the town of Zapolyarny.

Nickel-copper mineralization occurs as disseminated, semi massive and massive sulfides within a gently dipping sequence of ultramafic flows, intrusives and sediments.

The deposit, including the higher grade mineralization, outcrops at surface and has "excellent geometry" for open pit mining, the company writes on its website.

The mineral resource was based on an open-pit optimization utilizing a nickel price of US$8 per lb, a 70% metallurgical recovery, and a smelter payable of 70%. Copper was not used in the pit optimization.

The Kola Peninsula has a long history of mining and boasts strong mining infrastructure. There is ample electric power and water on the property.

There is a rail siding within 3 km, as well as a deep-water all season port at Pechenga -- 35 km from the site. The main highway from Murmansk to Russia's border with Norway lies on the northern edge of the property and there is good access to power, water and a local workforce, the company says.

Souker is open for expansion to the east, southwest, and at depth. The company believes that portions of the deposit are amenable for open pit mining.

The company has a 52-week trading range of 21¢ to $1.70 and has 53.8 million shares outstanding.

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