Private company pland `89 start for rich Timmins nickel deposit

Timmins Nickel Inc., a private company of which Slack is the chairman, has acquired an option to earn a 51% interest in Redstone from BHP-Utah Mines, a large Australian-controlled multinational mining company.

Timmins can earn its interest by spending $4 million on exploration in 1989. The company has moved quickly since signing the deal on Dec 21. Surface clearing and site preparation began on the New Year’s weekend, Koos Schippers, vice president of Timmins Nickel explained to The Northern Miner. “We proposed (to BHP) an underground exploration program which was to start in the beginning of January,” Stephen McIntyre, president of Timmins Nickel added.

The underground plan is to drive a decline ramp to the 250-ft level and complete 600 ft of drifting on two levels and 600 ft of raising, Schipp ers said. This underground program will be augmented by a 7,000-ft surface drill program.

Following completion of the $2.75 million program in April, the company will review its data with the intention of making a production decision in May leading to nickel production by June. Additional capital costs to production are estimated at $2.5 million.

The possibility of using the nearby Pamour Gomill facility in Timmins for milling is the reason behind the extremely low start-up costs. “We’re evaluating mill alternatives,” Schippers explained. “But the most likely is the Pamour Gomill. They’re doing metallurgical testing to see if the ore is compatible.” Timmins Nickel plans to mine at a rate of 350 tons per day to produce about six million lb of nickel per year.

Apart from handy infrastructure, the real beauty of Redstone lies in its grade — averaging 2.9% nickel per ton. Reserves total 453,000 tons according to Schippers. For perspective, the grade translates to 58 lb of gross in-situ nickel per ton, which at current spot LME nickel prices of $7.44(US) has a value of $431(US) per ton.

Schippers feels Timmins can mine and mill a ton of rock for $65. Transporation and smelter charges would be additional. Incorporating typical smelter fees and other charges and a $4(US)-per-lb price for nickel, The Northern Miner estimates Redstone could generate operating profits in excess of $13 million(C) per year. If nickel prices remain firm near current levels, profits become enormous.

Although Timmins is still a private company, Slack says consideration will be given to taking the company public.

]]>