The PEA, published December 2011, models production of an 18% Ni, 1% Co concentrate for sale to smelters. Initial mill throughput of 43,400 tonnes per day ramps up to 84,600 tonnes per day in year 6.
After year 21, low grade stockpiles are processed.
Projected Turnagain Nickel Production
KEY DATA
C1 Cash Cost: $4.26 per pound. (C1 is total cash cost to produce a pound of nickel, including transportation and smelter charges, net of byproduct credits)
NPV pre-tax* (8% discount) US $1,295,000,000
NPV after-tax* (8% discount) US $724,000,000
2
IRR pre-tax* (100% equity) 15.9%
IRR after-tax* (100% equity) 13.5%
Initial Capital Investment US $1,357 million
Expansion Capital in Year 5 US $492 million
Payback period* 7.3 years
Mill operation 27.2 years
* Based on: Nickel Price: US $8.50 per lb.
Cobalt Price: US $14.00 per lb.
Exchange Rate: 0.95 US$/CAN$
Resource within pit: Measured 206 million tonnes, 0.231% Ni, 0.014% Co
 Indicated 356 million tonnes, 0.226% Ni, 0.013% Co
 Inferred 201 million tonnes, 0.235% Ni, 0.013% Co
The PEA 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.
CAPITAL COSTS:
(U.S. $ millions)
Initial Expansion Total LOM
(Year 5)
Mine 244 68 406
Off Site Infrastructure 253 0 0
Processing 733 406 1,392
Other & Sustaining 95 18 478
Working Capital 32 0 32
Total Capital $ 1,357 $ 492 $ 2,308
OPERATING COSTS:
 (US$/tonne)
Year 1-5 Year 6-21 LOM
Mining 3.11 3.11 2.52
Processing (incl. Tailings) 4.69 4.38 4.44
General and Administration 0.57 0.29 0.33
Total Operating Cost $ 8.37 $ 7.78 $ 7.29
Operating costs are cash costs on site, before transportation and smelter charges.
3
MINERAL RESOURCES
The total estimated resource for the Turnagain Project, at a 0.1% Ni cut-off, is as follows:
Measured : 227,379,000 tonnes @ 0.22% Ni and 0.014% Co
Indicated : 638,103,000 tonnes @ 0.21% Ni and 0.013% Co
Inferred : 976,295,000 tonnes @ 0.20% Ni and 0.013% Co
DEVELOPMENT PLAN
The PEA evaluates the development of the Turnagain deposit by conventional open-pit methods with trucks and shovels. Material will be processed using a conventional concentrator to produce nickel-cobalt concentrate.
KEY METRICS:
 Year 1-5 Year 6-21 Average LOM
Strip Ratio 0.74 0.83 0.82
Annual Mill Throughput (Million tonnes) 15.8 31.3 28.1
Average Mill Feed Grade
Nickel (%) 0.261 0.246 0.230
Cobalt (%) 0.014 0.013 0.013
Average Recoveries
Nickel (%) 58.0 57.7 56.4
Cobalt (%) 58.0 57.7 56.4
Annual Metal Production
Nickel (lbs.) 52,717,000 97,871,000
Cobalt (lbs.) 2,822,000 5,363,000
Total Metal Production
Nickel 2,181,552,000 lbs.
Cobalt 123,181,000 lbs.
Annual Concentrate Production
Dry (tonnes) 132,846 246,663 203,101
Total Concentrate Production 5,497,474 dry tonnes
4
SENSITIVITY:
Nickel Price/lb. * $7.50 $8.50 $9.50
Pre tax IRR 13.2% 15.9% 18.3%
After tax IRR 11.0% 13.5% 15.4%
Pre tax NPV (8%) $781,000,000 $1,295,000,000 $1,809.000,000
After tax NPV (8%) $367,000,000 $724,000,000 $1,035,000,000
* FX varies with nickel price. At base case $8.50/lb. nickel, Cdn $ = .95 U.S. $. At
$9.50/lb. nickel, Cdn $ = 1 U.S. $. At $7.50/lb. nickel, Cdn $ = .90 U.S. $.
OPPORTUNITIES
Potential for payable platinum and palladium in the concentrate
Improved metallurgical performance
Increased mine life with existing defined resource and Hatzl area resource
Optimization of tailings storage facility construction
Additional resource potential for both nickel/cobalt and platinum/palladium
within the Turnagain ultramafic complex
Third party ownership/operation of the transmission line
Financing of the proposed interconnection fee tariffs over five years
Shared access development cost

This summary document 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.

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 document has been reviewed and approved by Neil Froc, P. Eng, a Qualified Person
consistent with NI 43-101.