JOHANNESBURG (miningweekly.com) – The major nickel discovery at Dutwa in Tanzania was poised to eventuate into a low-cost mine by 2012 when some analysts were forecasting a nickel price of $8/lb, African Eagle operations director Chris Davies said at the weekend.

Davies told Mining Weekly Online that the economic viability of the proposed nickel project had been based on a nickel price of $7/lb and a breakeven price of $6,50/lb.

At $7/lb, the project would yield $1,5-billion in revenue over the life-of-mine, which was currently 21 years.

On Friday, nickel was trading at $7,30/lb and, prior to the global economic meltdown, the price as high as $11/lb.

Agitated-tank-leach technology was found to be the most viable of the processing options, followed by heap leaching, and no recourse would be necessary to the expensive, high-pressure acid-leach technology that had given nickel laterites a bad name, Davies added.

The study also used $100/t for transport costs, but Davies expected those costs to decline appreciably as a result of new planned investment in the port of Mombasa, as well as proposed new investment in rail networks in Tanzania and Kenya, which would significantly improve the economics of the project.

There was potential to highgrade in the first operational years of the project, which would sweeten returns further.