OREANDA-NEWS. On June 04, 2008 OJSC MMC Norilsk Nickel (“Norilsk Nickel”), Russia’s largest diversified mining and metallurgical company, has begun commissioning the 12 million tonne per annum Dense Media Separation (“DMS”) plant at Tati Nickel and following a review of project economics, in agreement with the Government of the Republic of Botswana (“GRB”), has indefinitely postponed the Activox® Refinery Project, in which GRB and Norilsk Nickel hold 15% and 85% respectively, reported the press-centre of Norilsk Nickel.

Commissioning of Dense Media Separation Plant
The 12 million tonne per annum DMS plant, which selectively increases the head grade of run of mine material, has begun commissioning on schedule and within budget parameters.  The DMS plant is expected to increase annual production at Tati from 14,500 to 22,000 tonnes of contained nickel in concentrate, reduce total cash operating costs and extend the life of mine by seven years to 2019.

The Activox® Refinery Project
Following the acquisition of LionOre Mining International by Norilsk Nickel, an extensive review of the Activox® Refinery Project was initiated by Norilsk Nickel.  This included internal and independent third party reviews which highlighted a substantial project cost escalation from the September 2006 Bankable Feasibility Study estimate of US\\$498 million.

The aim of this project at Tati Nickel was to improve overall recoveries of nickel from concentrates that are currently being treated by traditional pyrometallurgical means. The incremental recovery gained in this application at a brownfield site does not economically justify the capital expenditure increase, and therefore the shareholders have agreed to postpone the project indefinitely. 

The major contributing factors to the substantial cost escalation were an increase in construction, equipment and project management costs worldwide.  In addition short term energy constraints, as a result of the tight energy balance currently being experienced in Southern Africa, were assessed as a risk that would have adversely affected the commissioning, time to production and overall economics of the Activox® Refinery Project.

The Activox® Demonstration Plant
Norilsk Nickel continues to develop the Activox® hydrometallurgy technology as a viable process for nickel sulphides and the Activox® Demonstration Plant in Botswana will continue to operate as a large scale test site producing LME grade nickel and copper cathodes.  A major bulk sample of concentrate from Norilsk’s Kola operations in Russia is planned to commence testwork at the Activox® Demonstration Plant.

Outlook
Despite the postponement of the Tati Activox® Refinery Project, the Tati Nickel Mine has a sustainable, long-term future with a current life of mine to 2019, ore reserves of 99 million tonnes, mineral resources of 98 million tonnes and forecast annual nickel production of 22,000 tonnes of nickel in concentrate from 2009. 

There is potential to further increase Tati’s life of mine which is currently being studied and includes the evaluation of the nearby Selkirk Deposit as a potential open-pit operation, which has mineral resources of 231 million tonnes at 0.24% nickel. The Pre-Feasibility Study is due for completion by the end of 2008. 

Exploring Alternatives for Growth in Botswana
Norilsk Nickel, through its longstanding and successful partnership with the Government of the Republic of Botswana, continues to evaluate and assess opportunities for a long-term sustainable future of the Botswana nickel industry.  Both parties are proactively exploring a number of alternatives to meet these objectives.