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LionOre Announces Nickel Agreement with QNI

LionOre Australia (Nickel) Limited will examine the feasibility of a significant expansion of its nickel sulphide operations in the Lake Johnston region of Western Australia having executed an exclusive nine month option agreement with QNI Pty Ltd (a wholly owned subsidiary of BHP Billiton) under which LionOre Nickel can move to 100% control of the Maggie Hays deposit and surrounding exploration tenements. The Maggie Hays deposit is located three kilometres to the south of the recently commissioned Emily Ann Nickel Mine (100% LionOre Nickel).

LionOre Nickel will immediately commence a feasibility study to investigate the potential for the development of the Maggie Hays deposit. The study will consider the utilisation of the nearby Emily Ann treatment plant, associated infrastructure and management as part of an expanded and integrated operation. The expansion would entail the doubling of the Emily Ann treatment plant capacity to approximately 500,000 tonnes per year. The existing Emily Ann treatment plant was designed and built with a potential future expansion in mind.

The option, if exercised, will provide LionOre Nickel with 100% control of the Maggie Hays deposit (currently 31%) and surrounding exploration tenements throughout the Lake Johnston region (currently 33%). Consideration would be A$16.7 million payable as follows:

  • A$6 million upon the exercise of the option, and
  • A$10.7 million payable over five years on an interest-free basis, commencing 12 months after the option is exercised.

The Emily Ann Nickel Mine commenced production in late 2001 from an underground nickel mine utilising an on-site conventional nickel sulphide concentrate plant with a designed annual throughput rate of 250,000 tonnes of ore. At this production level, Emily Ann will produce approximately  6,700 tonnes of payable nickel per annum averaged over the life of the mine.

During the March 2002 Quarter, Emily Ann continued its commissioning and ramp-up phase to achieve its targeted long-term production rate of 250,000 tonnes per annum.