OREANDA-NEWS. September 26, 2007. Johannesburg, South Africa and Moscow, Russia Federation: 26 September 2007 - African Rainbow Minerals Limited (ARM) and Norilsk Nickel, 50:50 JV owners of the Nkomati Nickel Mine in the Mpumalanga Province in South Africa, are pleased to announce the approval of a R3.2 billion ($445 million) Phase 2 Large Scale Mining Expansion to increase average annual nickel production to 20,500 tonnes from 5,500 tonnes and extend the life of mine by 18 years to 2027.

Peter Breese, Chief Executive of Norilsk Nickel International commented: "Approval of the Phase 2 Expansion cements Nkomati's long term future as it unlocks around 1 million tonnes of contained nickel resource and quadruples annual nickel production to 20,500 tonnes. Norilsk Nickel is planning to invest R6 billion (+/-$830 million) in Africa over the next three years to double nickel production and implement the innovative Activox® technology.

The expansion also delivers a powerful boost to the regional Mpumalanga economy through this large direct investment and the creation of new employment opportunities. The recent successful delivery of the Interim Plan on time, within budget and with zero lost time injuries by Nkomati project team bodes well for this project."

ARM Chief Executive Officer, Andr? Wilkens said: "The Phase 2 Large Scale Mining Expansion takes ARM to the next level of becoming a larger producer of nickel, in line with our 2 x 2010 strategy, and at an operational cost which is globally competitive." 
The Phase 2 Large Scale Mining Expansion

The Phase 2 Large Scale Mining Expansion will exploit two zones of the large layered polymetallic disseminated sulphide resource, which contains 904,335 tonnes of nickel. The first is the Main Mineralised Zone (MMZ) which is currently being mined by the Interim Phase through underground and open pit mining. This is overlayed by the Peridotite Chromititic Mineralised Zone (PCMZ) which will be mined by open pit mining. In addition to nickel, by-products of PGMs, chromite, copper and cobalt will also be recovered.

Mining will continue from the underground mine, at the rate of 47,000 tonnes per month (tpm), and the development of two new open-pits, Pits 2 and 3, which will produce 578,000tpm of ore at a steady state of production. The average mill grade for the total project will be in the order of 0,4% nickel, over the life of mine.

The current 100,000tpm concentrator will be upgraded to 250,000tpm to process the PCMZ ore and a new 375,000tpm concentrator for the MMZ will be constructed to give an overall concentrator capacity of 625,000tpm. The mine's related infrastructure will also be upgraded, including construction of two new tailing facilities and an upgrade of the power supply to 80MVA.
Construction will commence in early 2008 and is scheduled to take 24 months from announcement date. Production will be sequenced, targeting initial production ramp up from the MMZ concentrator during the third quarter of 2009, with full production by first quarter 2010, and then initial PCMZ production ramp up targeted during the third quarter of 2010, with full production by 2011.

Average annual nickel production in concentrate is forecast to be 20,500 tonnes over the 18 year life of mine. By-product production is expected to be 9,000 tpa copper and 110,000 ounces per annum PGMs, predominantly palladium.
The expansion secures 254 jobs and creates an additional 330 new jobs and during construction will employ some 2 000 contractors.

Project Economics

The project assessment was based on a capital cost of R3.2 billion ($445 million) in May 2007 terms and an average nickel cash cost forecast of $3.57/lb. This will result in an after-tax real IRR greater than 20%. The project will be funded from Nkomati internal cash flows and by both partners when required. The release of the project triggers the $20 million payment by Norilsk Nickel (previously LionOre) to ARM in accordance with the original transaction.

Refining

Nkomati has already secured toll smelting and refining capacity for its concentrate. A Bankable Feasibility Study ("BFS") will be carried out during 2008 to examine the viability of constructing an Activox® refinery for Nkomati.

African Rainbow Minerals - Disclaimer

This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the safe harbour created by such sections. All statements other than those of historical facts included in this presentation are forward-looking statements including, without limitation, (i) estimates of future earnings, and the sensitivity of earnings to commodity prices; (ii) estimates of future commodity production and sales, (iii) estimates of future cash costs; (iv) estimates of future cash flows, and the sensitivity of cash flows to commodity prices; (v) statements regarding future debt repayments; (vi) estimates of future capital expenditures; (vii) estimates of reserves, and statements regarding future exploration results and the replacement of reserves. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, commodity price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries in which we operate and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any "forward-looking statement" to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Norilsk Nickel - Forward-Looking Statements

Certain statements contained herein are forward-looking statements that reflect current views with respect to future events. The forward-looking statements are based on the opinions and estimates of both African Rainbow Minerals management and Norilsk Nickel management, or on opinions and estimates provided to and accepted by management. These opinions and estimates include, but are not limited to, commodity prices, changes in government legislation and regulations, geological estimates, competitive factors, costs of production and capital costs, foreign exchange rates, and litigation. Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied. Readers are therefore cautioned not to place reliance on any forward-looking statement.

For more detailed information look on http://www.nornik.ru/en/press/news/2218/