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MPE Issue42 Links

MPE Issue42 Links

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Published by kmnisbet

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Published by: kmnisbet on May 05, 2010
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01/09/2013

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1
In January
2008 SRK took on the role o Independent Engineer (IE) or the project inancing orMirabela Nickel’s Santa Rita project located in Bahia state, Brazil.
Santa Rita project nancing
No. 42SRK’sInternationalNewsletter
 
The Santa Rita project is an open pit mine with aconventional nickel sulde concentrator. Initially,it was based on a proven and probable reserveo 84Mt with a grade o 0.61% Ni, mining4.6Mt o ore a year and producing 17,000t o Niconcentrate, with a Ni grade o 13% plus Cu andCo by-products.SRK’s initial IE report supported the projectbut fagged a number o risk issues andrecommended subsequent ollow-up work. Thereport was submitted to prospective lenders andin September 2008, SRK made presentations toselected syndicate members in New York andLondon. Letters o Commitment were due romlenders when the nancial crisis hit, as the rmo Lehman Brothers ailed. Needless to say, theproject nancing did not proceed.Despite negative sentiment surrounding thenancial crisis and rapidly declining metalsprices, Mirabela took the bold step o continuingwith project construction, albeit at a slowerpace. Using equity unding, they initiated anexpansion study to 6.4Mt a year, based on anincreased reserve o 120Mt. In January 2009,SRK was engaged again to audit the new reserveand expansion plan. Mirabela successully raisedadditional equity unding and procured bridging,otake and trade nance to support continuedconstruction activities.SRK signed o on the new scope and cashfowmodel or the project in April 2009; unding orUS$190M was successully concluded with therst loan drawdown shortly thereater. 
…continued 
 
Initial ore mining at Santa Rita
 
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SRK
 
recentlycompleted acomprehensive Due Diligence (DD)study on a complex mining operationin Southern Arica. The copper miningoperation consists o a complexarray o surace and underground oreproduction operations together withprimary and secondary beneciationacilities. SRK’s approach to DDstudies is to involve proessionalsta in an integrated multi-disciplineapproach. The presence o wateraects the geotechnical design,both surace and underground,and urther complexity is addedi several end products requiredierent process routes and dierentmarkets. Smelting and rening addmore environmental requirements.Particularly on the Arican continent,the continuous supply o electricalpower and the need or emergencypower are important or continuousoperations.SRK put together a multi-disciplinedteam o 18 engineers and scientists
 AFRICA 
 
SAG and ball mill building at Santa Rita
Sn R prj nnn…
(continued) 
Throughout the oten painulprocess, SRK kept a close watchon developments at the requesto prospective lenders and, whilemaintaining its independence,perormed the role o devil’s advocatewith the site team during regular sitevisits. The team’s response indicatesthey ound this interaction invaluable.The stalled nancing, expandedscope, and lengthened constructionschedule inevitably combinedto increase project capitalcosts. Nevertheless, the projectconstruction was successullycompleted in October 2009 andthe rst concentrate was producedin November 2009. At the time othis writing, commissioning wasprogressing according to plan.Neal Rigby: nrigby@srk.com
Neal Rigby
D
r. Neal Rigby,SRK Global GroupChairman, is aCorporate MiningConsultant with 36years’ experience in the mining sector.For the past 20years, he has servedas a senior participant in dealmaking,supporting the rationalisation,merger, disposal and acquisition ointernational mining companies andmining inance institutions: his role todeine the undamental value, risksand opportunities o mining projects.Neal has undertaken conceptual through easibility studies in over 50countries worldwide, or a wide rangeo projects.Neal Rigby: nrigby@srk.com
 
3
D dn sd n  mpmnn prn n Srn ar
Typical Southern Arican open pit in the early stages o development
to complete the DD in time; the teamwould have ew parallels in miningconsultancies worldwide.As part o the DD a multi-disciplinerisk assessment workshop washeld, with client participation toidentiy key obstacles in reachingplanned production commitments. Thegeologist and process engineer, therock engineer and geohydrologist andthe tailings and waste disposal engineerwere amongst the diverse disciplinesrepresented.The workshop, a marathon session,covered the operations rom explorationthrough mine design and developmentto production and transportation othe nished metal products. Theclient, taking on the residual risks, puttogether a program or mitigation to bemanaged on an ongoing basis to reducethe operation’s risks.The size o the Environment and Socialteam (5) refects the importance ocompliance with the Equator Principlesand Perormance Standards. Once,converting Mineral Resourcesto Mineral Reserves was settledbetween the Geologist and the MiningEngineer but today, compliancewith environmental and socialrequirements is paramount.Logistics and communication provedto be a challenge. However, thetechnical team met each evening todiscuss issues; this interaction provedinvaluable in understanding theinterdependencies involved.Translating the technical issues into anancial model is key. The SRK teamput together an interactive model thatrefected two business cases – oneincluding Inerred Resources and oneexcluding them. The model showedhow changes at any stage o any othe interlinked processes aect netpresent value (NPV) and cost per unito production.Roger Dixon: rdixon@srk.co.za
RogeR DixoN
R
oger Dixonis a CorporateConsultant andChairman o SRK’sJohannesburgoce. He has 37years’ experiencein miningengineering, withprojects relating toengineering studies, mineral reserveestimation, due diligence studieson platinum, gold and copper andeasibility studies on open-pit andunderground operations.Roger helped ormulate the MineHealth and Saety Act o 1996. Hewas involved in preparing the SouthArican Code or reporting resourcesand mineral reserves (SAMREC Code)in 2000, and mineral asset valuation(SAMVAL Code) in 2008. He currentlychairs the Committee or MineralReserve International ReportingStandards (CRIRSCO), which hasrepresentatives rom the major miningcountries around the world.Roger Dixon: rdixon@srk.co.za

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