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Hard Creek Nickel Corporation
December 10, 2007
Trading Symbol: TSX.V-HNC
Preliminary Assessment for Turnagain Nickel Project
Shows Positive Economics with Potential 29 Year Mine Life
(VANCOUVER) - Hard Creek Nickel Corporation (TSX.V - HNC) today announced
that AMEC Americas Limited (AMEC) has completed a positive Preliminary
Assessment (the "Study") of the Company's 100% owned Turnagain Nickel
Project, located near Dease Lake in British Columbia, Canada. The Study
dated December 10, 2007 and entitled "Updated Preliminary Assessment of the
Turnagain Nickel Project", will be filed on SEDAR within 45 days and
available at the same time for viewing on the company's website
www.hardcreek.com.
The Study is based on a measured, indicated and inferred mineral resource
estimate completed by AMEC. This estimate incorporates a revised and
expanded geological interpretation of the Horsetrail zone and peripheral
area which includes 19 drill holes from the 2007 drilling program. Timing
of the Study did not allow the resource estimate to include an additional 32
infill and stepout holes for a total of 11,933 metres (39,150 feet) drilled
in 2007. Samples from these drill holes have been prepared and are in the
process of being analyzed.
The Study initially considered nickel recovery by both the production of a
saleable concentrate and a hydrometallurgical process. Completion of the
study was based on the hydrometallurgical process option given its better
economic viability. Results presented below are for the open pit mining and
hydrometallurgical process scenario.
Base Case Assumptions Nickel Price US $ 7.50/lb
Cobalt Price US $11.00/lb
Copper Price US $ 1.40/lb
Exchange Rate (US$/CDN$) 0.95
Resources at 0.10% NiS Cut-Off Measured and Indicated 489 million tonnes @
0.163 % NiS and 0.012 % Co
Inferred 560 million tonnes @ 0.152 % NiS and 0.011 % Co
Mining & Production Strip Ratio 0.44:1
Annual Throughput 18 million tonnes
Daily Production Rate 50,000 tonnes
Overall Ore Milled 516.6 million tonnes @ 0.160 % NiS and 0.011% Co
Metallurgical Recoveries 73.6% Ni Overall Recovery
66.5% Co Overall Recovery
Average Annual Production 20,397 tonnes Ni in nickel hydroxide
1,301 tonnes Co in cobalt hydroxide
Capital Cost CDN$ 1.38 billion
Operating Cost CDN$ 9.43 per tonne milled
Life of Mine 29 years
Payback 6.4 years
Internal Rate of Return 12.2 %
Net Present Value 8 % discount CDN$ 422 million
10 % discount CDN$ 187 million
Key parameters and results:
* Note: "% NiS" refers to nickel percent that is present in sulfides.
"Management is pleased with the results of the Study," said Mark Jarvis,
President of Hard Creek Nickel. "Given recent escalating mine capital cost
projections we are encouraged to find out that even with these increases the
preliminary assessment came out positive with a mine life of 29 years.
AMEC's assessment indicates that the deposit is potentially mineable and has
identified that further work is justified. Hard Creek will be undertaking
additional work in all major areas to advance the project to the
pre-feasibility level. Confirmation and availability of the required power
for the project has also been identified by AMEC as critical. Hard Creek is
aggressively pursuing all possible options for providing sufficient power to
make the project feasible."
Hard Creek is waiting for analytical results from most of the 32 infill and
stepout holes around the Turnagain deposit from the 2007 drilling program
which were not included in the mineral resource estimate stated in the
Study. These results are expected to increase the overall resource and
upgrade the confidence level of a portion of the current inferred mineral
resource. Analytical results from our drilling program will be released as
they become available. An updated mineral resource estimate will be
provided once all of the results have been received.
Recent drilling results obtained since the closing date of the Study have
already indicated the potential to include platinum and palladium as a
portion of our overall Turnagain deposit resource (see news release dated
November 28, 2007). These results were obtained within the limits of the
ultimate pit identified in the Study. As previously stated, the potential to
include platinum and palladium as a portion of our overall resource could be
significant. Close spaced drilling will be required during the next drill
season to determine the significance and extent of this mineralization.
Turnagain Nickel Project Overview
The Turnagain Nickel project, which is 100% wholly-owned by Hard Creek, is
located in British Columbia about 1350 km (835 miles) northwest of Vancouver
and 70 km (44 miles) east of Dease Lake. The property consists of 81
contiguous mineral claims covering an area of approximately 29,370 ha
(72,570 acres). Nickel and copper sulfides were first identified on the
property in about 1956 with Falconbridge Nickel Mines completing the first
exploration programs during the period from 1966 to 1973. Exploration to
date on the Turnagain property has included geological mapping, geophysical
and geochemical surveys and more than 75,620 metres (248,100 feet) of
diamond drilling in 304 drill holes. The total includes an additional 56
drill holes (32 infill and stepout holes from the Turnagain deposit and 24
exploration holes) which were completed since the closing date of the Study.
Mineral Resources
The updated mineral resource estimate for the Turnagain deposit was
performed by Dr. Guillermo Pareja of AMEC under the guidance of Mr. Greg
Kulla, P.Geo. of AMEC. A significant improvement between this estimate and
previous estimates is the use of geologic domains in the model. Previous
models, which used grade shells and did not have the benefit of a lithologic
model, showed conditional bias and local excessive smoothing.
The table below presents the estimate of the resource of the Turnagain
Nickel deposit using a 0.10% NiS cut-off, as at September 25, 2007, of 489
million tonnes of Measured and Indicated Resources at 0.163% NiS and an
additional 560 million tonnes of inferred Resources at 0.152% NiS. A total
of 42,128 metres (138,215 feet) of diamond drilling in 158 drill holes were
used in interpolating grade in the resource area.
The mineral resources of the Turnagain deposit were classified in accordance
with CIM Definition Standards and Best Practices referred to in NI 43-101
which have a reasonable expectation of economic extraction. The
mineralization of the Project satisfies criteria to be classified into
Measured, Indicated and Inferred mineral resource categories.
Mineral Resource Estimate Table
Cut-off Grade
at 0.10% NiS Tonnage (thousands) % NiS % total Ni % Co
Measured 59,464 0.184 0.250 0.011
Indicated 429,688 0.160 0.218 0.012
Measured + Indicated 489,152 0.163 0.222 0.012
Inferred 560,052 0.152 0.204 0.011
The sulfide nickel and cobalt grades are based on an analytical procedure
employed by Acme Laboratories that consists of a concentrated hydrogen
peroxide plus ammonium acetate leaching solution that is believed to be
selective at dissolving nickel and cobalt from sulfide mineral species while
leaving the nickel and cobalt in silicates undissolved. As a precautionary
step all the sulfide nickel grades were assigned a value of zero if the
corresponding sulphur assay was less than 0.2% S. Sulphur assays were based
on Leco furnace method except for results obtained in 2006 which were ICP
analysis. This precaution may cause an underestimation of the nickel
resource and could be large enough to be a material impact. However, this
approach limits the possibility that an overestimation of the nickel
resource has occurred.
Mining and Processing
The mining assessment for the Turnagain nickel deposit is based on typical
industry standards for a preliminary assessment study with regard to the
nature and mineability of the resource. The Study initially considered
nickel recovery by both the production of a saleable concentrate and a
hydrometallurgical process. Completion of the Study was based on the
hydrometallurgical process option given its' better economic viability.
The proposed mining operation is a conventional shovel and truck open pit
mine feeding a 50,000 tonne per day process plant using standard mineral
flotation technology. Throughput analysis was not performed as part of the
Study. Mining and processing of the deposit will be initiated in a "starter
pit" which has been scheduled to maximize the production of high-grade
material during the first five years, to shorten the capital payback period.
Lower grade material from the starter pit will be stockpiled and fed to the
mill in the later years of operation. The pit will expand in phased
pushbacks until the ultimate pit limits are reached. The table below shows
the contained tonnes and grade in the ultimate pit shell. About 67% of the
mineral resource contained in the ultimate pit is in the Measured or
Indicated category.
Ultimate Pit Tonnes and Grade Table
Cut-off Grade
at 0.10% NiS Tonnage (thousands) % NiS % total Ni % Co
Measured 56,611 0.187 0.252 0.012
Indicated 290,871 0.164 0.222 0.010
Measured + Indicated 347,482 0.167 0.227 0.010
Inferred 169,941 0.145 0.199 0.010
Material for processing will be hauled to a primary crusher located near the
southwest rim of the Main Pit. The mine at the 50,000 tonne per day
throughput has a potential life of 29 years with approximately 516.6 million
tonnes at 0.160% NiS and 0.010% Co to the mill at an average stripping ratio
of 0.44:1. The construction schedule is estimated at 24 months.
Feed to the mill will be processed using a concentrator and
hydrometallurgical process facility on-site to produce separate nickel and
cobalt hydroxide products that will be trucked and shipped out of the
province through the Port of Stewart, for sale to ferronickel producers. In
addition, a separate copper concentrate will be produced which can be sold
to a copper smelter. Processing will be based on a conventional nickel
sulfide flotation flowsheet to produce a sulfide concentrate followed by a
hydrometallurgical process to convert nickel and cobalt from its sulfide
forms to a hydroxide form.
The overall metallurgical recoveries of metals have been estimated as
follows:
Overall Metallurgical Recoveries (%)
Metal Concentrator Hydromet Cumulative
Nickel 77.5 95 73.6
Cobalt 70 95 66.5
Copper 50 95 47.5
Metal in Saleable Product
Metal Average Annual Production Life of Mine Production
Nickel (in hydroxide) 20,397 tonnes (44.9 million lbs) 591,525 tonnes (1.304
billion lbs)
Cobalt (in hydroxide) 1,301 tonnes ( 2.8 million lbs) 37,734 tonnes
(0.083 billion lbs)
Copper (in sulfide) 2,281 tonnes ( 5.0 million lbs) 66,157 tonnes (0.145
billion lbs)
Saleable product would be paid for on the basis of 85% for nickel contained
in nickel hydroxide and 80% for cobalt hydroxide and copper in copper
sulfide.
Capital and Operating Costs
The initial capital cost of the project is estimated to be $CDN 1,381
million in 3rd Quarter, 2007 Canadian dollars. A contingency of $CDN 250
million has been included in this cost. The capital cost has been split in
the following manner:
Capital Cost Estimates
Type Area CDN $M
Direct Mining 116.3
Site Development 66.2
Main Process Facilities 390.9
Hydromet Plant & Reagent Services 106.0
Ancillary Buildings & Facilities 66.7
Tailings Facility 44.0
Utilities 2.2
Total Directs 792.3
Indirect Owner's Cost 79.2
Construction Indirects 64.7
Engineering Procurement & Construction Management 95.1
Construction Camp & Catering 32.4
Capital Spares 22.0
Freight 38.5
Start-up & Commissioning Allowance 6.5
Total Indirects 338.4
Contingency (~25%) 249.9
TOTAL Capital Cost Estimate 1,380.6
Sustaining capital for the project over 29 years is $CDN 173.5 million. Of
this $CDN 8.3 million is spent in Year 4 and $80.5 million is spent in Year
8 to add and replace equipment in the pit. The remainder is attributed to
the capital requirements of the process and tailings facilities.
The operating cost summary is shown in the following table:
Operating Cost Estimate
Area CDN $/tonne
General & Administration (G&A) G&A Labor 0.14
Direct 0.29
G&A Total 0.43
Mining Ore 1.40
Processing Process Labour 0.59
Consumables 5.59
Power 1.37
Miscellaneous 0.06
Process Total 7.60
TOTAL (CDN $/tonne milled) 9.43
Financial Analysis
At a price of $7.50 US/lb of nickel, $11.00 US/lb of cobalt, and $1.40 US/lb
of copper, an exchange rate of 0.95 US$/CDN$ and a discount rate of 10.0%,
the resulting net present value (NPV) is $186.9 million Canadian. The
project with these assumptions has a rate of return of 12.2%. Other cases
based on various ranges of metal price are presented as follows:
Pre-tax Net Present Value - Various Cases
Area Case 1 Case 2 Base Case 4 Case 5 Present
Commodity (US$/lb) Nickel 6.00 6.75 7.50 8.25 9.00 12.00
Cobalt 8.80 9.90 11.00 12.10 13.20 34.00
Copper 1.12 1.26 1.40 1.54 1.68 3.15
IRR % 4.8 5.0 12.2 15.3 18.3 31.8
NPV (CDN $M) Cum. Net Cash Flow 889 1,859 2,828 3,797 4,767 9,905
5.0% Discount -22 466 954 1,443 1,931 4,484
8.0% Discount -279 72 422 773 1,123 2,945
10.0% Discount -390 -102 187 476 764 2,258
12.0% Discount -471 -229 13 255 497 1,745
15.0% Discount -553 -362 -172 19 210 1,191
Payback (yrs) 13.2 8.0 6.4 5.3 4.5 2.6
Recommendations
AMEC indicated in the Study that the deposit is potentially mineable and
that further work is justified. It was recommended that work in all major
areas be undertaken to advance the project to the pre-feasibility level to
better determine the economic viability of the project. This work includes
drilling to better define the resources and upgrade these into reserves.
More metallurgical work is necessary to ensure that saleable metal products
can be produced. More environmental and geotechnical work is necessary to
allow the project to move forward. The pre-feasibility study would examine
variants to derive the appropriate path to the development of this deposit.
Confirmation and availability of the required power from the North American
grid is critical to this project.
Qualified Persons
The Qualified persons responsible for the preparation of the Study on the
preliminary assessment are:
. Mr. Greg Kulla, P.Geo. Principal Geologist, AMEC Vancouver office
. Mr. Gerrit Vos, P.Eng. Principal Mining Engineer, AMEC Vancouver office
. Mr. Ignacy (Tony) Lipiec, P.Eng. Senior Process Engineer, AMEC Vancouver
office
This Preliminary Assessment includes the use of inferred mineral resources
that are considered too speculative geologically to have economic
considerations applied to them that would enable them to be categorized as
mineral reserves. The study is preliminary in nature and there is no
assurance the mining, metal production, or cash flow scenarios outlined in
this report would ever be realized. Mineral resources are not mineral
reserves and do not have demonstrated economic viability.
This press release uses the terms "measured" "indicated" and "inferred"
resources. We advise U.S. investors that while those terms are recognized
and required by Canadian regulations, the U.S. Securities and Exchange
Commission does not recognize them. U.S. investors are cautioned not to
assume that any part or all of mineral deposits in these categories would
ever be converted to reserves.
This press release contains "forward looking statements". Such
forward-looking statements involve a number of known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the company's plans to materially differ from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Known risks include, but are not limited to,
financing risks, commodity price risks, scheduling risks and engineering
risks. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the statements
were made, and readers are advised to consider such forward-looking
statements in light of the risks set forth in the company's continuous
disclosure filings as found at www.sedar.com.
This news release has been reviewed and approved by Neil Froc, P. Eng, a
Qualified Person consistent with NI 43-101.
"Mark Jarvis"
MARK JARVIS, President
HARD CREEK NICKEL CORPORATION
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The TSX Venture Exchange does not accept responsibility for the accuracy or
adequacy of this news release.
1060 - 1090 W. Georgia St., Vancouver, BC, Canada V6E 3V7
T: 604-681-2300 F: 604-681-2310
E: info@hardcreek.com W: http://www.hardcreeknickel.com
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