Agata Overview


September 10, 2013: Robust Economics Announced for the Agata High-Iron DSO Project; click here to read the full story.

The Agata project is located in Agusan del Norte province, within the Surigao mining region on the island of Mindanao, Philippines. The Surigao region is a major nickel producing region providing ore to processing plants in Australia, China, Korea and Japan.

Mindoro currently holds a 75% interest in the Agata Project and an option to acquire the remaining 25% from its Philippine partner, Minimax Mineral Exploration Corporation. The original option terms were based on gold and copper production scenarios and are being renegotiated to make these more applicable to the economic scenario of nickel laterite production.

In 2012, Mindoro entered into joint venture agreements with TVI Resource Development (Philippines) Inc. ("TVIRD") to progress a two stage development strategy for the Agata Project. If all options are exercised, TVIRD will have a 60% interest in the Agata Project and Mindoro 40%.

The Agata Project is being advanced under the following two stage development objective:
  • Stage 1, Direct Shipping Operation (DSO) joint venture:
    • A feasibility study for a high iron DSO project is near completion and permitting is in progress. A similar laterite deposit to the south of Agata, owned by a private Philippine company, has been successfully mined as a Direct Shipping Operation since 2006. Subject to satisfactory market pricing and granting of permits, production at Agata is anticipated in early 2014.
       
    • TVIRD may earn its 60% interest in the DSO joint venture through achieving a direct shipping operation before September 24, 2015, with Mindoro carried to production.

     
  • Stage 2, Processing joint venture:
    • Atmospheric leaching ("tank leaching") is the preferred processing option which offers a low capital cost route to processing while optimising the value of the nickel laterite
       
    • Pilot-plant testing commenced in June 2013 which will further define the technological parameters to be used in producing a Bankable Definitive Feasibility Study.
       
    • The Definitive Feasibility study is in progress and is targeted for completion by early 2014
       
    • The Joint Venture is evaluating the potential of using the pyrite located a short barging distance away on Mindoro's Pan de Azucar Project for the production of sulphuric acid. The most expensive component of nickel processing is sulphuric acid, therefore, the opportunity to supply our own sulphuric acid could significantly lower the nickel processing costs.
       
    • TVIRD may earn its 60% interest in the Processing joint venture by funding a Definitive Feasibility Study by September 25, 2016, with Mindoro carried through to the completion of the study.
NI 43-101 Resources
An updated National Instrument 43-101 technical report on the Agata project, filed in April 2013 (available on SEDAR and Mindoro's website), reflects an updated resource estimate for the Agata North nickel laterite resource. The new resource provides a robust foundation for moving forward, initially, with a direct shipping operation (DSO) of high-iron limonite (upper laterite horizon), followed by atmospheric leach processing of the underlying saprolite horizon.

Highlights of the technical report:
  • Measured and Indicated resources increase to 33.9 million dry metric tonnes (dmt) at 1.1% nickel
     
  • Inferred resources are 2.0 million dmt at 1.04% nickel
     
  • Estimated contained nickel is 390,000 tonnes
     
  • At a cut-off grade of 44% iron, there are an estimated 7.9 million dmt or about 10 million wet metric tonnes (wmt) at 48.5% iron and 0.94% nickel -- a DSO product grade currently much in demand in China
Wet metric tonnes (wmt) is the measurement commonly used for DSO, and is the payable product, whereas dry metric tonnes (dmt) is used in reference to the processing operation.

Stage 1 Direct Shipping Operation (DSO)
The high iron DSO is a near-term opportunity that has potential to generate strong cash flows (contingent on, among other things, receipt of permits in a timely manner). Sufficient high-iron limonite has been defined for 10 years of DSO production with the majority of the product shipped during the first five years. The stage two processing plant is expected to commence operation before the end of these first five years. The high iron laterite deposit occurs one kilometre from the coast, which is expected to minimize transportation costs due to the close proximity of the mine pit to the planned port. The high iron DSO operation would be expected to generate early cash flow until the nickel processing plant is built and becomes operational but shipments would continue after this until the high iron material is exhausted.

The high iron DSO operation has an Environmental Compliance Certificate (ECC); however, other permits, such as a port permit and a Declaration of Mining Project Feasibility are also required.

Stage 2 Processing Operation
Bench-scale test work confirms the Agata nickel laterite ore is highly amenable to acid leaching, with a high rate of nickel extraction achieved at a low acid consumption rate. The process technology being developed, which has produced these results, aims to achieve maximum nickel recovery with low acid consumption, which translates into increased metal production and lower operating costs. As a result of this test work, the joint venture has commissioned and commenced operation of pilot-plant testing. This will further define the technological parameters to be used in producing a Bankable Feasibility Study, planned for late 2013, with the goal of building a commercial processing plant.

For additional information, see Mindoro's June 6, 2013, press release.

Limestone DSO
The limestone occurring on the Agata Project is of very high purity levels and potentially suitable for DSO. The initial objective is to develop a resource, mine and ship limestone DSO utilizing the infrastructure developed for the high iron DSO. No permits are yet in place for mining the limestone.

Since the quality of limestone quarried at Agata is expected to be high, plans also include constructing a lime production facility at Agata. The lime produced would be used in the nickel processing plant, offsetting the costs of imported lime while also creating potential for some to be sold. The lime processing facility is a medium-term project currently expected to come online at the beginning of 2015 pending further testing, economic studies and receipt of all required permits, among other things.

Promissory Note with TVI
On June 24, 2013 Mindoro announce that it had signed a secured promissory note to receive up to CAD $1.3 million from TVI pursuant to an agreed upon schedule of monthly draws. Funds will be repayable within twelve months of the first draw down; however, there is no minimum draw down amount and funds, plus interest, may be repaid at an earlier date without penalty. Mindoro will accrue interest at the greater of 15% per annum or TVI's cost of capital for funds obtained for this purpose. The loan will be used to fund general and administrative operations and finance an initial acquisition payment to Minimax Mineral Exploration Corporation for the re-negotiated 25% interest in the Agata project. The promissory note is secured by shares in Mindoro's wholly owned subsidiary, MRL Nickel Philippines Inc.

Surigao District: Agata Nickel Project
Surigao District: Agata Nickel Project