Anfield Nickel Corp. (TSX VENTURE: ANF) ("Anfield") is pleased to
announce the results of the preliminary economic assessment ("PEA")
on its 100% owned Mayaniquel nickel project located in northeastern
Guatemala (the "Project"). The results of the PEA indicate that a
ferronickel operation at Mayaniquel has favourable economic
potential and the Project should be advanced to a prefeasibility
study. Highlights of the study are as follows (all dollar figures
in US dollars):
Highlights
-- Robust project economics driven by a low strip ratio (0.35:1), excellent
metallurgy, good existing infrastructure, a large mineral resource and
amenability of ore to physical upgrading to increase nickel grades of
plant feed.
-- Base case net present value ("NPV") of $606 million, at an 8% discount
rate, and an internal rate of return ("IRR") of 14.1%.
-- The base case assumes a long term nickel price of $8.25/lb, an 8% real
discount rate, a $0.19/lb contained iron credit, $0.08/Kwh power cost
and $100/tonne long term coal price (including freight) (the "Base
Case").
-- The PEA was completed on only the mineral resources contained within
Anfield's Sechol and Tres Juanes deposits. These two deposits comprise
approximately 63% of the indicated mineral resources and 52% of the
inferred mineral resources,above a 1.0% nickel cutoff, defined to date
at the Project.
-- Average nickel in ferronickel production of 19,900 tonnes per year for
29.5 years with an average nickel in ferronickel grade of 22.5%.
-- Capital payback in 5.2 years.
-- C-1 life of mine ("LOM") cash costs (net of iron credits) estimated to
average $3.14 per pound of nickel sold.
-- The Project may generate approximately 700 permanent jobs and 800 direct
jobs during the three year construction period and potentially $1.8
billion in taxes and government royalties payable to the Guatemalan
government.
The salient details of the PEA are summarized in the table below
(all dollar figures are in US dollars):
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NPV ($8.25/lb Ni, 8% discount rate) $606 million
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IRR 14.1%
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Initial Capital Expenditure $1,227 million
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Sustaining Capital Expenditure $199 million
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LOM C-1 Cash Costs (net by-product credits) $3.14/lb Ni sold
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Rotary Kiln Furnace Capacity 80MW
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Annual Ore to Plant 1.33 million tonnes
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Strip Ratio (excluding sorting plant rejects) 0.35:1
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Mine Life 29.5 years
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Ore Grade Upgrading 29%
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Average grade of Mineral Resources delivered to plant 1.68% Ni
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LOM average annual nickel in ferronickel production 19,900 tonnes
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Anfield will host a conference call on Thursday July 7th, 2011
at 11:00 am (Pacific) or 2:00 pm (Eastern) to discuss these
results. Call-in information is provided at the bottom of this news
release.
The PEA was supervised by William Rose, P.E. and Principal of
WLR Consulting, Inc., a qualified person. Mr. Rose has reviewed and
approved the contents of this news release. The PEA was managed by
MTB Project Management Professionals, Inc. (project management,
infrastructure, ancillary capital and operating costs and cash flow
modeling) and comprised several studies prepared by: SIM Geological
Inc. and BD Resource Consulting, Inc. (resource estimate and model,
quality assurance quality control program); WLR Consulting,
Inc.,(mining, production schedule, and mining capital and operating
costs); Dr. Nic Barcza, PrEng., (metallurgical consultant); Mintek
(metallurgical testwork); Laser Analytical Systems & Automation
GmbH (ore sorting testwork); Tenova Pyromet (Pty) Ltd. (process
engineering, infrastructure, plant capital and operating
costs);MineSense Technologies (ore upgrading); Ausenco Vector
(geotechnical facilities, port facilities, and barge unloading
facility and capital and operating costs); Gochnour &
Associates, Inc. (baseline environmental studies); and Social
Capital Group (socioeconomic studies). The following consultants
will serve as qualified persons for their respective sections of
the technical report:
-- Robert Sim, P. Geo. of SIM Geological Inc.
-- Bruce Davis, FAusIMM of BD Consulting, Inc.
-- Dr. Nic Barcza, HLF SAIMM
-- William Rose, P.E. of WLR Consulting, Inc.
The National Instrument 43-101 compliant technical report
summarizing the results of the PEA and the updated mineral resource
estimate previously announced on June 9, 2011 will be available on
the Company's website (www.anfieldnickel.com) and SEDAR
(www.sedar.com) by July 22, 2011.
Project Economics
MTB Project Management Professionals, Inc. developed a cash flow
valuation model on the Project based upon the geological and
engineering work completed to date. The Base Case was developed
using a long term forecast nickel price of $8.25/lb. This price
forecast is significantly lower than the current price of
approximately $10.50/lb nickel and the model takes into
consideration a decline in the nickel price from current levels
over the first four years of the mine's life to the forecast long
term average price. In addition, a by-product credit of $0.19/lb
iron contained within the ferronickel product has been included in
the Base Case.
The following table shows the NPV of the Base Case at various
discount rates:
------------------------------------------------------------
Discount Rate (Real) NPV
------------------------------------------------------------
0% $3,706 million
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4% $1,551 million
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6% $989 million
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8% $606 million
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10% $337 million
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12% $146 million
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Please visit the following link to view a chart that shows the
sensitivity of the Base Case's NPV (8% real discount rate) and IRR
to changes in the nickel price:
http://media3.marketwire.com/docs/anf707a.jpg.
Mineral Resources
WLR Consulting, Inc. used the mineral resource estimate
completed by Sim Geological Inc. and BD Resource Consulting, Inc.
for the Sechol and Tres Juanes deposits, as disclosed in Anfield's
June 9, 2011 news release, and the corresponding block model, to
develop a mine plan and production schedule for the Project. That
mineral resource estimate, at a 1.0% nickel cutoff grade,
determined transition and saprolite indicated mineral resources of
17.2 million tonnes grading 1.62% nickel and inferred mineral
resources of 23.3 million tonnes grading 1.44% nickel; and limonite
indicated mineral resources of 7.5 million tonnes grading 1.20%
nickel and inferred mineral resources of 7.0 million tonnes grading
1.17% nickel.
Floating cone analyses were used to determine the extent of
laterite mining areas for each deposit and the best sequence for
economic development. The floating cone analysis,based on a nickel
price of $5.00/lb,defined the maximum economic extents of mineable
mineralization, which were subsequently adjusted to conform to
current concession boundaries. The resulting pit limits were then
used to estimate, at a 0.8% nickel cutoff, contained indicated
mineral resources of 27.7 million tonnes, contained inferred
mineral resources of 31.2 million tonnes and total waste of 20.8
million tonnes in determining the mine plan and production
schedule. This mine plan resulted in a LOM stripping ratio of
0.35:1. The mineral resource cutoff grade was reduced to 0.8%
nickel due to the recoveries and economics associated with the ore
sorting plant. Of the 58.9 million tonnes of contained mineral
resources, approximately 20.0 million tonnes will be rejected in
the sorting plant as a part of the ore upgrading process.
Note: Mineral resources that are not mineral reserves do not
have demonstrated economic viability. The PEA is preliminary in
nature and includes the use of inferred mineral resources that are
considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as mineral reserves. Thus, there is no certainty that
the preliminary economic assessment will be realized. Actual
results may vary, perhaps materially.
Mining & Processing
The Project will utilize conventional open pit mining methods
and production is scheduled to deliver 3,600 tonnes per day (1.33
million tonnes per year) of lateritic ore to the plant for 29.5
years. Nineteen percent of the mined ore will be delivered directly
to the processing plant, while the remaining mined material (1.61
million tonnes per year) will be sent to the upgrading plant, where
low nickel grade and high iron material will be rejected, thereby
providing the processing plant with a total average feed grade of
1.68% nickel. The plant feed will be sent to a single line rotary
kiln where it will be dried and calcined with coal added prior to
being fed into the 80MW furnace and subsequent refining furnace to
produce the ferronickel product. The processing plant is forecast
to produce approximately 88,300 tonnes per year of ferronickel over
the mine's life containing approximately 19,900 tonnes of nickel at
an average grade of 22.5% nickel.
Capital Costs
Tenova Pyromet (Pty) Ltd, MTB Project Management Professionals,
Inc., Ausenco Vector, MineSense Technologies and WLR Consulting,
Inc. developed capital cost estimates for the proposed mining and
ferronickel operation. The following table summarizes the capital
cost estimates in the PEA for the Project:
----------------------------------------------------------------------------
Direct Capital Costs $805.1 million
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Indirect Capital Costs $92.5 million
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Owner Direct and Indirect Capital Costs $169.6 million
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Contingency (15%) $160.0 million
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Total (Base Case) $1,227.2 million
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Upfront Working Capital $4.2 million
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LOM Sustaining Capital Costs $199.4 million
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The capital cost estimates have been compiled with an accuracy
level of -15% to +35%.
Operating Costs
The results of the PEA show that a mine at the Project will be a
low cost operation, with operating costs potentially averaging in
the lower half of the industry cost curve(1). The Project benefits
significantly from the low strip ratio, relatively easy terrain,
excellent metallurgy, amenability of material to physical upgrading
and close proximity to major infrastructure. Based upon a
comprehensive study of future power supply in Guatemala that has
estimated long term power costs of between $0.06 and $0.09/Kwh, the
Base Case has assumed a long term power cost of $0.08/Kwh. In
addition, long term coal prices used in the Base Case were assumed
to be $100/tonne (including freight). The PEA estimates that the
C-1 cash costs (net of iron credits) over the life of the mine will
average $3.14 per pound of nickel sold. C-1 cash costs include
at-mine cash operating costs, royalties (BHP Billiton and
government), mine reclamation and closure costs, and ferronickel
transportation and freight costs.
To see a graph of the C-1 cash costs, please visit the following
link: http://media3.marketwire.com/docs/anf707b.jpg.
Infrastructure
Substantial regional infrastructure is in place within the
vicinity of the Project. The Project is located within 70
kilometers of the Caribbean Sea and 167 kilometers by road from the
largest port in Guatemala, Santo Tomas,thus facilitating the
exportation of ferronickel and importation of coal and other
consumables. In addition, major power infrastructure is within two
kilometres of the Project. The local labour force is large and
while not versed in mining and nickel processing, provisions have
been made in the capital cost estimate to train the local labour
force, with the assumption that labour drawn from within Guatemala
will ultimately manage and operate the mine and plant
facilities.
Environmental
The Project has been designed to meet World Bank Guidelines for
social and environmental management practices. Preliminary baseline
studies completed to date have included surface water quality,
meteorological, archaeological, social context analysis,
stakeholder mapping, community health, biological (flora and fauna)
and re-vegetation studies. As the nickel deposits are largely soil
based, mine waste material will be largely overlying topsoil and
low grade limonitic soils. Provisions have been made within the
mine plan and operating costs to account for the storage of both
the topsoil and low grade limonitic soils and the recontouring and
re-vegetation of mined areas with these soils once the deposits
have been mined.It is expected that this process will allow the
mined areas to largely return to its pre-mined state of
vegetation.
Next Steps
An infill drilling program at the Sechol and Tres Juanes
deposits is ongoing and will form the basis upon which a
prefeasibility study is expected to be completed in 2012. In
addition, Anfield has received an extension to its Chatala
concession that will allow it to further explore and expand the
Tres Juanes deposit. A pilot plant to further evaluate and refine
the ore upgrading plant design is being designed and will be built
within the next five months. In addition, a bulk sample of run of
mine and upgraded feed materials will be processed through a rotary
kiln electric furnace pilot plant in Brazil to further improve the
process design and flowsheet.
Conference Call
Call in details for the conference call to be held on July 7 at
11:00am (Pacific Time) are:
North American toll-free: 1-888-789-9572
International: 1-416-695-7806
Participant Code: 1132147
A replay of this conference call will be available from
Thursday, July 7 until Thursday July 21 and will be posted on
Anfield's website at www.anfieldnickel.com. The replay numbers
are:
North American toll-free: 1-800-408-3053
International: 1-905-694-9451
Pin: 7473353
Anfield Nickel Corp.
David Strang, Chairman
CAUTION REGARDING FORWARD LOOKING STATEMENTS: This news release
may contain "forward-looking statements" within the meaning of the
applicable Canadian securities legislation. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts" or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would" or "will be taken" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of Anfield Nickel Corp. to be
materially different from those expressed or implied by such
forward-looking statements, including but not limited to: risks
related to the exploration and potential development of the
Company's projects, risks relating to whether the Guatemalan
government will deny extensions and reapplications of exploration
licenses or an application for an exploitation license, risks
related to the loss of licenses, mineral resources and/or
exploration licenses with resource targets on them, risks related
to governmental expropriation, risks related to the uncertainty of
timing of events including the timing scheduled for results of the
prefeasibility study and construction of pilot plants for Anfield
Nickel Corp.'s operations, risks related to international
operations, the actual results of current exploration activities,
conclusions of economic evaluations, changes in project parameters
as plans continue to be refined, future prices of commodities, as
well as those factors discussed in the sections relating to risk
factors of our business filed in Anfield Nickel Corp.'s required
securities filings on SEDAR. Although Anfield Nickel Corp. has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results to be materially different from those anticipated,
described, estimated, assessed or intended.
There can be no assurance that any forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. Anfield Nickel Corp. does not undertake
to update any forward-looking statements that are incorporated by
reference herein, except in accordance with applicable securities
laws.
(1) Per nickel mining industry operating costs forecast for 2010
contained in Roskill's Information Services Ltd report - Nickel:
Market Outlook to 2014 (Twelfth Edition, 2010).
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Contacts: Anfield Nickel Corp. David Strang Chairman + 604 646
1899 + 604 687 7041 (FAX) dstrang@anfieldnickel.com
www.anfieldnickel.com
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