LionOre Mining International Ltd. said it gained approval from the government of Botswana to start building a $620 million nickel refinery as it positions itself to expand operations in the country.
The multi-listed company said it has been developing its new refinery, dubbed Activox, which will soon take activities performed by its smelter in Selebi Phikwe and other activities in Canada to be done at its Tati Nickel mine.
The move will see its activities concentrated in Botswana and possibly lease it to regional mining house which are aiming to get better value from their copper.
“We’re on our way to vertical integration as a producer of nickel,” said Ted Mayers, chief financial officer of the Toronto-based company, with Bloomberg in a telephone interview on Monday. “We’re starting to spend money tomorrow.”
The system, which the company calls Activox, uses a chemical solution to extract metals from finely ground ore at low temperature and moderate pressure, the company said.
When complete in 2009, the refinery will make it possible to produce 22,000 metric tons (24,250 tons) of nickel a year from the company’s Tati Nickel mine, it said in a statement.
The refinery will be built at the Tati Mine and will be 15 percent owned by the Botswana government, LionOre said.
Further, the company said it has confirmed new substantial deposits at Selkirk at Tati Nickel in Botswana following an initial phase of resource drilling.
The company started the drilling areas surrounding the Selkirk mine which has been on care and maintenance since mining operations on the mined-out massive sulphide body (MSB) ceased in 2002. The positive results from the first phase of resource evaluation drilling confirm the presence of a large disseminated sulphide orebody down-plunge of the depleted MSB.
Colin Steyn, President and CEO of LionOre, said “We are enormously encouraged by the potential of this large resource at Selkirk to substantially enhance the future production profile and longevity of operations at Tati Nickel.
“This will undoubtedly contribute positively to the overall project economics of the proposed Activox┬« and DMS (Dense Media Separation) projects at Tati Nickel. Our priority now is to convert this resource into a reserve and we remain extremely confident of extending this new resource even further,” he said.
The drilling has confirmed the continuity of a thick package of gabbro hosted disseminated sulphides around and down-plunge of the underground mine.
The development gives the potential for both open pit and underground mining activities at the site.