Nickel Rim South exploring underlying footwall.

The new owners of Falconbridge are inheriting a shiny new base metals asset when the Nickel Rim South mine begins hoisting ore in 2010.

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With the company's dwindling nickel and copper reserves in Sudbury expected to run out by decade's end, the former Falconbridge executives were under pressure to find a major deposit and quickly get it into production.

They were jubilant in 2001 when their award-winning geological team made the high grade mineral discovery of the year in the underlying footwall rocks of Sudbury's igneous complex, a traditionally under-explored area of the basin.

It's expected to provide 20 years of breathing room for the new Xstrata Nickel to build up their Sudbury reserves with a renewed commitment to invest in area exploration.

The company is in the midst of a four-year, $630 million underground drilling campaign to better define the ore body with an inferred resource of 13.4 million tonnes of mostly nickel, copper, platinum and palladium.

Encouraged by surface drill results, geologists and engineers have wasted little time in plunging deep into the footwall rocks in the east end of the basin while drawing up plans for a mine.

Project director Greg Ashe says most of the major surface buildings and the hoisting plant are largely complete with this year's activity focused on shaft sinking and wrapping up their engineering work for the start of more detailed mine building next year.

Two shafts are currently being sunk; a ventilation shaft down to a depth of 1,675 metres and a main production shaft down to 1,785 metres. The ore body sits between 1,100 and 1,600-metres below surface.

In April and May of 2007, underground lateral work will begin with three horizontal drifts out to the ore body situated about 250 to 500 metres east of the main shaft.

North Bay mine builders, Cementation Canada Inc. were handed the development contract worth more than $150 million. They are the largest of the 300 contractor organizations on a site filled with more than 2,700 workers.

The peak construction activity takes place in two years when the underground construction will be in full swing with on-going lateral work and the shaft sinking finishing up, while underground diamond drilling continues.

"2008 in terms of workload and scope is definitely our biggest year," says Ashe.

The handoff to Xstrata Nickel's operations--Sudbury Mines/Mill--will happen in late 2009 once enough infrastructure is in place to deliver 60 per cent of production capacity.

Nickel Rim will yield its first ore, on a very limited tonnage basis, during the fourth quarter of 2008. Full production gets underway in 2010 producing 1.25 million tonnes of ore per year.

Ashe admits it's unusual for a mining company to start building both surface production facilities and a main shaft as advanced exploration drilling is underway.

In Sudbury, advanced exploration shafts are typically first sunk with some lateral development for underground exploratory drilling before any mining plans are drawn up. Exploration shafts are normally about the size of a vent shaft.

Ashe says for "strategic reasons", the company opted for a "hybrid" in sinking both a main production shaft and a ventilation shaft concurrently.

"We made the decision because of what was happening with our ore reserves in Sudbury. We needed to bring this into production as fast as we can.

"We took some risk, but the way we justified that was, in order to pay back the cost of capital to sink these two shafts in our program, we have to have a minimum amount of nickel-metal."

While he declined to divulge that minimal threshold, Tracey Jeffs, Nickel Rim South's area leader of metallurgy, mining and stakeholder relations, says "rigorous financial modeling" was performed before they decided to proceed with construction.

"The economics turned out much better to do them both concurrently," says Jeffs.

Based on mineral results from 41 surface drill holes since 2001, Jeffs says, "We were very confident we would recover our $630 million investment."

The Nickel Rim South takes up a relatively small surface footprint of only six hectares near the Sudbury airport. It's situated about two kilometres south of the old Nickel Rim mine, a copper and nickel near-surface deposit that was active in the 1950's.

Ashe says the new mine will incorporate the "best of the best" development practices gathered from mining and tunneling operations around the world.

Although there's no 'Stars Wars' technology being introduced on site, they are spending considerable cash up front in using shotcrete for ground support instead of the bolt and screen used at their other operations. They also expect to use the latest and best technology of jumbo drilling rigs.

Ashe says once the underground definition drill phases ends in 2008, they will present the actual mineral calculations to Xstrata's board of directors for additional money to complete the project in late 2009.

In mid-August, the inferred resource for Nickel Rim graded 1.8 per cent nickel, 3.3 per cent copper, 1.8 grams per tonne of platinum and 2.0 grams per tonne of palladium.

The project engineers have also installed some environmental safeguards to capture every drop of waste and storm water generated by the site.

The site features a two-stage settling pond system with a gravity pipeline to another waste water system at the original Nickel Rim mine site. The ground and storm water is then pumped over to its nearby smelter waste water treatment plant where it's treated and released into the Coniston Creek.

Jeffs says this proactive thinking should cut down on their site rehabilitation costs after the mine closes.

"When we designed this site, we deliberately designed it for closure," says Jeffs.

Ashe says he's particularly proud of the project's safety record so far with 1.7 million hours without a lost time injury.

Both engineers say the changeover of ownership from Falconbridge to Xstrata PLC will have no effect on development plans.

New Xstrata Nickel boss Ian Pearce was formerly Falconbridge's senior vice-president of projects and engineering before being named the company's chief operating officer earlier this year.

"Ian is very intimate with Nickel Rim and the process," says Jeffs. "In terms of Nickel Rim, things have not changed one bit."

www.xstratanickel.com

By IAN ROSS 

Northern Ontario Business