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Mindoro Nickel-laterite Project, the Philippines
Property Description and Location
The Mindoro Nickel project is a large nickellaterite project in the Philippines developed by Crew. The property is held by Aglubang Mining Corp. Inc (“AMC”) a Philippine corporation. Crew has an option to acquire shares in AMC should the project qualify for an FTAA, where 100% foreign ownership is allowed in the Philippines as per a Supreme Court ruling in January 2005.
The Nickel Project is located on the Island of Mindoro, approximately 200 km south of Manila. The concession comprises a 9,720- hectare (~100 km2) area straddling the border between the Provinces of Oriental and Occidental Mindoro about 30 km from the coast. The area is underlain by an extensive laterite mineralization as a result of the accumulation of nickel and cobalt in the tropical soil profile following intensive chemical weathering of the ultramafic source rocks from late Tertiary to recent times.
The original Exploration Permit (“EP”) for the Mindoro project was issued in 1997 and renewed in March 1999 for additional two years. It was the first EP to be renewed in the Philippines under the new Mining Law. Subsequently, in Dec 2000, Aglubang Mining Corp was granted a Minerals Production Sharing Agreement (docketed as MPSA No167- 2000-IV) covering a large part of the most developed project area, and securing the Company rights to develop and exploit the resource over a 25-year period subject to certain conditions. The remaining parts of the concession area were included in another MPSA application by Alag-Ag Mining Corp. (“AMI”).
In 2001 the MPSA was unexpectedly cancelled by the new Secretary of the Department of Energy and Natural Resources (“DENR”). AMC appealed the decision to the Office of the President, on the basis that the decision breached to the due process as defined in the terms of the agreement, and in March 2004 the office of the president issued a resolution revoking the order of cancellation and reinstated the MPSA. The response of the Office of the President was a clear signal of the change in the Government’s attitude towards mining.
The full concession area is controlled by the Aglubang and Alag-Ag Mining Corporations, respectively, which are owned by a consortium of Crew Minerals AS and a group of Philippine partners. The property has no other underlying ownership claims. In accordance with Philippine mining legislation, agreements have been signed with the resident indigenous tribes in the area (Mangyans), granting them a royalty based on net profits of the mining revenues.
Feasibility Study
A pre-feasibility study on the Mindoro Nickel project was completed by Kvaerner Metals, Australia in August, 1998.
The Mindoro Nickel project is now in a feasibility stage and the Company has reviewed the latest technological advances to ensure that a feasibility study will consider the most recent processing innovations. The most significant potential change to former plans are that the saprolite resource can now be fully integrated in the processing flow. This has the very significant implication that additional resources could be added and the metals output could be increased.
Work Conducted
The company has completed more than 1,200 drill holes and test-pits, conducted metallurgical test work as well as extensive environmental studies. A computer-assisted resource model, based on more than 10,000 assay results, has been prepared and independently verified.
Most of the resource evaluation has been completed and audited, and the database been confirmed by independent consultants (IMC of Australia). The resource evaluation has shown that the deposit is exceptionally homogenous and has the potential of supplying ore for well over 30 years of nickel-cobalt production.
After the return of the title to Aglubang Mning Corp. the Company has re-initiated its resource update work and the feasibility study. The incorporation of new analytical data and update of the resource database is now being completed to include data from 243 new drill holes and test pits, of which 119 holes were targeting resource expansion in adjacent subareas known as Upper Kisluyan and Buraboy areas, which lie outside the current resource definition in Lower Kisluyan.
Memorandum of Understanding
In line with the Company’s strategy to develop its non-gold assets with an industrial partner in July 1, 2005, the Company signed a Memorandum of Understanding (MOU) with Jilin JIEN Nickel Industry Corporation (“Jilin”) relating to the co-operative development of Mindoro Nickel Project. The Memorandum of Understanding (“MOU”) represents an agreement between Crew and Jilin on a joint contribution to further studies and test work. The MOU describes the framework for reaching a Definitive Agreement.
Local management has completed preparations for collecting of representative bulk samples for bench-scale test work. The SGS Lakefield Research test laboratory in Perth has been evaluated as the most competent facility for the work. Sampling will be completed during October- November, 2005 and the process test work should be completed and results available by beginning of next year.
The collection of bulk samples for testing will comprise about 250 kg of limonite and 250 kg of saprolite. All materials will be collected by drilling rather than by test pitting as the current wet season makes pitting potentially dangerous and cumbersome. The drilling will be conducted with the Company’s self tracking GM50 drill.
The Environment
The Forest Environment
Forest rehabilitation will be one of the most obvious visual effects of the project, as the excavated areas will be continuously replanted as the operation progresses. As the operation only involves the removal of 6-10 meter mineralized soil, it will allow instant full reforestation after excavation. The operation will also only affect a limited area at the time and, consequently, will not expose the district to soil erosion and flooding as intensive logging have done in the past. The actual project area as of today only contains secondary forest and scrub vegetation following intensive and partly unregulated logging activities.
The immature condition of the forest in the area provides limited contributions to the production of fertile top soil (humus) required for a sustainable growth of new forest.
Moreover, the common use of slash-and-burn practice by the indigenous people has exposed some areas to soil erosion and land slides, which has created scars in the surface in many places. It is a goal of the replanting and landscaping program, which is to be executed in parallel with the operations, to create a sustainable forest habitat, to re-establish the past forest environment and enable a reintroduction of its rich natural wildlife.
Watershed Protection
The natural drainage of the district is controlled by two relatively large rivers: the Ibolo and the Aglubang rivers that merge just east of the concession area, near the village of Villa Cerveza, to form the wide and anastomosing Magasawang- Tubic river plain, which eventually merge into one river running towards the sea near the town of Naujan. Both of these rivers have their headwaters well above the concession area and form its natural boundaries. The concession area itself is drained from three smaller streams, named the Kisluyan, Shabo and Buraboy rivers, and their tributary branches. These streams run in a generally NE-direction, dividing the slope into a number of equally sized and nearly parallel sub areas with a NE-SW elongation. This drainage pattern will allow a simple and efficient diversion of water from above actual operations sites, and minimize the risk of flooding and other unwanted effects. There will be no dam construction in relation to the stream diversions. The operation will have negligible effects on the natural drainage as water usage at the mine site will be insignificant and no siltation or other release of pollutants to the natural streams will be allowed. Contained rainwater from active excavation areas will be cleared before release into the natural drainage system. Proper septic tanks will be used for disposal of human waste at the camp site.
Wildlife Preservation and Sustainability
The natural wildlife in the area is currently very limited due to the low and immature forest growth in the entire concession area. The area has few sanctuaries for wildlife and it will be another major objective of the planned rehabilitation activities to provide such conditions that a gradual re-introduction of the natural wildlife can be established and given such protection that it will survive and multiply to attain a sustainable mass.
Mangyans and their cultural integrity
The Mangyans in the concession area comprise relatively few tribes who migrate between a number of selected locations in their effort to utilize the natural forest environment for their traditional lifestyle. During exploration campaigns, the Mangyans have been employed on an qual basis with other local personnel, and this opportunity has been considered by the Mangyans as a valuable supplement to their survival and efforts to retain their traditional life style.
In addition, the Company has supported the indigenous communities through the construction of a new and safer hanging bridge across the Aglubang River to allow the Mangyans to cross the river and sell their products even during the rainy season when the river is high and turbulent. A new tribal house has also been erected with support from the Company. The Company has throughout its presence regularly provided donations of seedlings and seed as well as occasionally supported traditional feasts with supplements of food and beverages.
Finally, the Company has operated a small medical clinic in Villa Cerveza since 1999, for the free use of the Mangyans and local villagers. This clinic has a nurse on permanent staff and a doctor on duty three days per week. The clinic also has arrangements for transport to the nearest hospital, if needed. This facility has been much appreciated and has been used extensively by the local communities throughout the period.
The Company believes that the local Mangyan population can sustain their existence and traditional lifestyle through intelligent support and close communication and coordination with the individual groups during operation. A fundamental precondition for this is the ability of the Mangyans to maintain their traditional lifestyle of farming and hunting, and the support to prevent unwanted interference with other cultural habits.
The industrial facilities
The Mindoro project, if implemented, may bring about major changes to Mindoro, and it will be natural to include some of the industrial implications and infrastructure this project may provide to the province of Oriental Mindoro.
At the mine site, the most obvious changes will be improved road access, including bridges to and from the operations site, and the establishment of a reliable power grid. The transport of ore from the mine site to the processing plant will require a dedicated all-weather highway to be constructed. Also, there will be a need for additional housing facilities to host the operations personnel and support facilities.
The processing facility will involve the construction of a large harbour facility with jetty pier to handle the shipping of ore and supplies as well as ferries and other commercial sea traffic. Being a large and sophisticated industrial facility it will provide substantial infrastructural development. This will include better roads and bridges as well as a large power plant which will help increasing the reliability and supply of electrical power to the local grid.
The industrial development will increase the need for associated support facilities such as fuel supply and mechanical workshop and provide a multitude of employment opportunities for skilled and semi-skilled local workforce (transport, material handling, fuel supply, mechanics, stevedoring; catering; maintenance; administration; housing development; recreational facilities). The project will also include a first-class technical training facility to facilitate specialized training and full transfer of technology.
The project will have a full time environmental monitoring task force to supervise its operations and this task force can also provide support to improve the general environmental standards of the province.
The tailings deposition
After the treatment and removal of the metals, the laterite slurry becomes a waste product, which needs to be deposited in a safe location. The material consists of a fine-grained red mud, which contains many of the same components as the original soil, less the removed metals. It has an iron- and magnesium-rich composition and a consistency like that of toothpaste. In contrast to typical mining tailings, the material contains no sulphides and has no concentrations of other metals above background values of natural soils. The deposition of this material therefore poses little risk of adding unwanted components to the environment.
The tailings can be deposited in natural depressions on land or in a deep marine environment. In both cases, the materials will have a composition close to that of the natural geological materials already there. Both of these solutions, however, require careful research and testing of the environmental impact before a final decision on which is the most advantageous is made.
A concern for land-based tailings deposit is the risk of leakage and displacement of the material, as with all large tailings deposits located in high rainfall areas. Also, because of its large volume it will occupy a relatively large area. On the positive side is that the deposit area will be continuously rehabilitated and can be used for agriculture subsequently as it does not contain toxic metals. However, the materials may require some additional handling and the deposition of adequate topsoil to serve this purpose.
The land-based tailings solution has the advantage that the materials remain accessible and can be treated further, at a later time, if desired. (For example, making use of the contained iron and magnesium should future technology and metal prices allow so).
The marine tailings option, on the other hand, is technically and environmentally more safe, as the materials will be deposited together with similar geological materials, the natural sediments on the seafloor. The tailings will have minimal effect on the environment, as the material will have similar mineral constituents as the sediments being continuously transported to the sea by rivers draining the area. Moreover, the proposed deposition site is so deep that anaerobic conditions (lack of oxygen) prevail and marine life therefore is limited. The marine deposition will not be visible and experience from tropical operations elsewhere has already shown that the tailings slurry will remain as a coherent heavy fluid until it settles at the sea floor, without causing up welling. The disadvantage is that marine tailings will not be as accessible after deposition, unlike the land-based deposits that remain available for future uses.
The tailings deposition aspect is undoubtedly a critical and a highly emotional issue of the project permitting and has to be dealt with through an entirely transparent and open process. A final decision regarding this issue can only be taken in accordance with strict international standards following a thorough review of the technical options and test results and the acceptance of competent governmental agencies, provincial authorities, public opinion and international banking syndicates shouldering the financing of the project.
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