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Hard Creek Nickel Corporation today announced that it has completed an updated positive Preliminary Assessment Study (PA) of the Company's 100% owned Turnagain Nickel Project, located near Dease Lake in British Columbia, Canada. The PA was compiled by Wardrop, a Tetra Tech Company, and will be filed on SEDAR within 45 days to be available at the same time for viewing on the company's website www.hardcreek.com.
The PA recommends open pit mining, milling at a rate of 87,000 tonnes per day, conventional flotation, and Outotec's chloride leach process followed by on-site nickel solvent extraction – electrowinning (SX-EW) metal refining. With a base case long term price of $8.50 per lb nickel and $17.50 per lb cobalt (all financial data are U.S. $), the study shows the project has a pre-tax Net Present Value of $819 million using an 8% discount rate. The mine would recover 1.88 billion pounds of payable nickel at an average "life of mine" strip ratio of 0.74 to 1 with an overall refined nickel recovery of 52.8% over 24.4 years.
On average, the project will produce 35,000 tonnes (77 million pounds) of payable nickel metal per year with a C1 cost of $3.34 per pound. The C1 operating cost is defined as the cash cost incurred at each processing stage, from mining through to recoverable nickel metal delivered to market, net of by-product credits (cobalt).
Capital costs for the mine, process plant, refinery and infrastructure development are estimated to be $2.92 billion.
Base Case Assumptions (without escalation):
Nickel Price: $8.50 per lb.
Cobalt Price: $17.50 per lb.
Exchange Rate: $0.90 U.S. $ / Can $
Resources:
The total estimated resource for the Turnagain Project, at a 0.1% Ni
cut-off, is as follows:
Measured + Indicated: 695,012,000 tonnes @ 0.216% Ni and 0.014% Co
Inferred: 510,818,000 tonnes @ 0.199% Ni and 0.014% Co
Mining and Production:
Strip Ratio (LOM) ----- 0.74 to 1
Annual Throughput ----- 31,138 million tonnes
Daily Milling Rate ----- 87,000 tonnes
Total Ore Milled ----- 761.2 million tonnes @ 0.212% Ni
and 0.014% Co
Mill Recoveries ----- 55.3% of Ni and 49.8% of Co
Refinery Recoveries ----- 95.6% of Ni and 95.0% of Co
Annual Payable Metal: ----- 35,006 tonnes (77.0 million pounds)
Ni as metal
----- 2,003 tonnes (4.4 million pounds) Co
as precipitate
Capital Cost: ----- $2,925 million
Operating Costs: ----- $10.74 per tonne milled
----- $ 3.34 per pound of Ni, net of
cobalt byproduct credits
Life of Mine: ----- 24.4 years
Payback: ----- 7.8 years
Internal Rate of Return: ----- 11.0%
Net Present Value (NPV)
at 8% discount rate: --- $819 million
"This study shows the project can produce nickel at a competitive cost and with relatively low technological risk," said Mark Jarvis, President of Hard Creek Nickel. "We are using standard milling and flotation technology. Our on-site refinery would use chloride leach technology at atmospheric pressure developed and backed by Outotec, a company well known for their working technological solutions in the mining industry, and with particular strength in SX-EW."
"Hard Creek Nickel's management regards the two year construction schedule and two year ramp up period contemplated in the PA as aggressive but realistic," continued Mr. Jarvis. "Estimated capital costs are high, which impacts Internal Rate of Return, Payback and NPV. These costs will be an area of focus as we advance engineering studies towards Feasibility."
"The resource remains open to the north and at depth, so future drilling may extend the mine life beyond the 24.4 years modeled in the PA," said Mr. Jarvis. "Other opportunities include further improvements to the grinding efficiency, metallurgical recovery and concentrate grade. Metallurgical testwork planned in the coming year will investigate these possibilities."
The Turnagain Nickel project, which is 100% owned by HNC, is located in British Columbia about 1350 km (835 miles) northwest of Vancouver and 70 km (44 miles) east of Dease Lake. The property consists of 65 contiguous mineral claims covering an area of approximately 33,220 ha (82,085 acres). Nickel and copper sulfides were first identified on the property in 1956 with Falconbridge Nickel Mines completing the first exploration programs during the period from 1966 to 1973. Exploration to date on the Turnagain property has included geological mapping, geophysical and geochemical surveys and more than 75,620 metres (248,100 feet) of diamond drilling in 304 drill holes.
The mineral resource for the Turnagain deposit was estimated by Mr. Ronald Simpson, P.Geo. of GeoSim Services Incorporated, Vancouver and classified in accordance with the CIM Definition Standards and Best Practices referred to in the NI 43-101 guidelines which have a reasonable expectation of economic extraction. The mineralization of the project satisfies criteria to be classified into Measured, Indicated and Inferred mineral resource categories.
The table below presents the estimate of the Turnagain Nickel deposit of 695 million tonnes of Measured and Indicated Resources at 0.216% Ni and an additional 511 million tonnes of inferred Resources at 0.199% using a 0.1% Ni cut-off. The current database used in interpolating grade in the resource area consists of 25,308 analyzed intervals in 273 drill holes representing 70,570 metres of core. Forty-seven small diameter holes with incomplete sampling drilled prior to 2002 were excluded from the database. Composited data from 204 drill holes comprising 20,542 assayed intervals (57,746 m) were used for block grade estimation.
Mineral Resource Estimate Table
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Category Tonnes Ni % Co %
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Measured 213,270,000 0.230 0.014
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Indicated 481,742,000 0.210 0.014
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Measured & Indicated – Total 695,012,000 0.216 0.014
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Inferred 510,818,000 0.199 0.014
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The mining assessment for the Turnagain deposit was performed by Mr. Robert Fong, P.Eng. of Moose Mountain Technical Services (MMTS) and is based on typical industry standards for a preliminary assessment study with regard to the nature and mineability of the resource.
The deposit will be mined by conventional open pit methods with trucks and shovels, at an average mill feed rate of 87,000 tonnes per day (tpd). Large mining equipment will be used to achieve high mining rates ensuring the lowest possible unit costs for mine operations. The waste and ore will require blasting and typical grade control methods using blast-hole sampling. The deposit will be mined in three pit areas. An elevated cut-off grade will be employed in the initial production years to enhance the economics of the project. Low grade material below the initial cut-off grade will be sent to a low grade stockpile and later blended with "run of mine" feed near the end of mine life.
The potential resource contained in the three proposed pits is summarized in the table below. The potential pit resource is estimated using an NSR cut-off value of C$ 7.30/t based on the preliminary cost assumptions for stockpiling, milling and site G&A per tonne of ore milled.
Ultimate In-Pit Resource Tonnes and Grade Table
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Cut-off Value at NSR
greater than Ore Tonnage
C$ 7.30/t (thousands) Ni (%) Co (%)
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Horsetrail & NW Pit 597,608 0.217 0.013
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Hatzl Pit 163,619 0.192 0.014
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Total 761,227 0.212 0.014
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The mine has a potential life of 24.4 years with approximately 761 million tonnes of ore at 0.212% Ni and 0.014% Co at an average stripping ratio of 0.74:1. The construction schedule is estimated at 24 months.
Material for processing is hauled to twin primary crushers located near the southwest rim of the Horsetrail pit. Crushed material is sent to the coarse ore stock pile via a 3 km conveyor for reclaim to the milling circuit. Grinding is done in two parallel semi-autogenous / ball mill / pebble crushing (SABC) circuits which then feed the flotation circuit. The combined rougher flotation concentrates feed three stages of flotation cleaners to upgrade the concentrate for thickening and filtering. Tailings are pumped to the tailings management facility for permanent disposal.
The mill will produce a 4% nickel concentrate for further refining on-site to extract the nickel as a metal product and cobalt as a hydroxide precipitate. The refinery uses Outotec's proprietary technology called "Outoteca Nickel Chloride Leaching" (ONCL) process.
Over the past year HNC has carried out preliminary process development work on both the Activox(R) and the ONCL processes. The concentrate leaching amenability test work demonstrates the Turnagain resource may be economically processed by either method. TWP (see under Engineering Consultants and Firms) and Dr. David Dreisinger, P.Eng. completed the final review for determining the base case option.
The overall metallurgical recoveries and payable metals have been estimated as follows:
Overall Metallurgical Recoveries (%)
---------------------------------------
Metal Concentrator Refinery Total
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Nickel 55.3 95.6 52.8
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Cobalt 49.8 95 47.3
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Payable Metal
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Metal Average Annual Production Life of Mine Production
---------------------------------------------------------------------------
Nickel 35,006 tonnes (77,175,000 lbs) 854,151 tonnes (1,883 million lbs)
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Cobalt 2,003 tonnes (4,416,000 lbs) 48,883 tonnes (107 million lbs)
(in hydroxide)
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Capital and Operating Costs
Capital Cost:
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Description $ x1000 %
-----------------------------------------------------------
Mine 202,765 6.9%
Process Plant 532,169 18.2%
Refinery 814,533 27.8%
Tailings Management Facility 39,230 1.3%
Site Infrastructure 201,589 6.9%
Off-Site Infrastructure 319,808 10.9%
Owner's Costs 78,597 2.7%
EPCM 178,067 6.1%
Indirect Costs 228,504 7.8%
Contingency 330,093 11.4%
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Total 2,925,355 100.0%
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Working capital of $50.9 million and sustaining capital of $595.6 million with reclamation and closure costs are included in the financial model.
The operating cost summary is shown in the following table:
C1 – Operating Cost Estimate
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Area $/tonne Ore $/lb Ni
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Mining 2.12 0.85
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Milling 4.20 1.70
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Refining 3.25 1.31
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Tailings Management Facility 0.20 0.08
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General and Administration 0.26 0.11
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Transportation/Insurance/Representation 0.71 0.29
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Total 10.74 4.34
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Cost $/lb Ni metal net of Cobalt credits 3.34
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At a price of $8.50 /lb of nickel, $17.50 /lb of cobalt, an exchange rate of 0.90 US$/CDN$ and a discount rate of 8.0%, the resulting net present value (NPV) is $819 million. The project with these assumptions has a rate of return of 11.0%. Other cases based on various ranges of metal price are presented as follows:
Metal Price Scenarios
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Nickel Cobalt
Case (US$/lb) (US$/lb)
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Base 8.50 17.50
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Base -10% 7.65 15.75
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Base +10% 9.35 19.25
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Current (March 3, 2010) 9.76 19.28
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Pre-Tax NPV, IRR, and Payback by Metal Price Scenario
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NPV at Selected
Discount Rates (Million $)
------------------------- Payback
Scenario 5% 8% 10% IRR (%) (Years)
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Base 2,118 819 241 11.0 7.8
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Base -10% 1,174 133 -327 8.5 10.3
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Base +10% 3,061 1,506 809 13.4 6.2
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Current 3,470 1,803 1,054 14.4 5.7
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