Gladstone Nickel Project Feasibility Study - Capital and Operating Cost Estimates



    
             Gladstone Pacific Nickel Limited (ACN 104 261 887)
                          ("GPNL" or "the Company")
    

    BRISBANE, QUEENSLAND, Oct. 26 /CNW/ - Gladstone Pacific Nickel Ltd (GPNL)
is pleased to report on the initial results of the Stage 1 feasibility study
for the Gladstone Nickel Project (GNP).
    These results indicate a C1 cash operating cost of US$2.19 per pound of
nickel(1), net of by-product credits, at full production of 63,000 tonnes of
nickel and 6,200 tonnes of cobalt per year. This positions the Project very
favourably in the 2nd quartile of the expected 2013 C1 cash costs across the
industry as reported by Brook Hunt in its 2006 Nickel Industry Cost Study.
    Capital cost of Stage 1 is estimated at US$3.4 billion(1)(2), and
comprises a two autoclave plant at Gladstone producing nickel and cobalt metal
from Marlborough ores blended together with substantial tonnages of ore
imported from New Caledonia.
    GPNL's vision is to build the world's largest nickel and cobalt refining
centre, treating South West Pacific nickel laterite ores at its site in
Queensland, Australia. The Stage 2 project involves expansion to four (4)
autoclaves whereupon the Gladstone Nickel Project (GNP) will produce
approximately 120,000 annual tonnes of nickel and 10,000 annual tonnes of
cobalt.
    The capital cost compares favourably with the previously estimated US$2.8
Billion (announced in the Company's December 2006 half yearly report), taking
into consideration foreign exchange movements and escalation rates over the
past year.
    This fourth generation High Pressure Acid Leach (HPAL) Plant is planned
to be fully integrated, with a metals refinery, enhanced saprolite leach
circuit, two mining operations with ore beneficiation and a dedicated acid
plant. Significant capital is also associated with ore handling in New
Caledonia and Gladstone. It is expected that the common user facilities at
Gladstone Port, the preassembled module yard and transit corridor, currently
included in the project costs, will become important infrastructure
developments for future projects in Gladstone.
    GPNL remains convinced that there are unique benefits to locating the
facility at Gladstone where there is supporting infrastructure, a cooperative
State government, a favourable environmental scenario, and the ability to
attract and retain a capable workforce for construction and operation.
    Historically, capital intensive nickel processing plants have been
developed adjacent to a dedicated ore resource; however GPNL's strategy with
the Gladstone Plant is to exploit ore sources that cannot justify a major
capital investment in their own right either due to their size or their
location. Australia remains an economic and politically stable environment in
which to make an investment of this magnitude.

    Operating Costs

    The Stage 1 IDFS is based on the Gladstone plant being supplied with a
blend of Marlborough ore (~30%) and east coast New Caledonian ore (~70 %).
Marlborough is a key element of the Project, providing secure local ore supply
and risk mitigation for any foreign ore supply disruptions, however unlikely.
Detailed mine plans and costs have been completed at the Marlborough deposits.
Overseas ore costs include the direct purchase of 800,000 tonnes of ore from
Société des Mines de la Tontouta ("SMT"), a company that owns nickel ore mines
and numerous nickel ore tenements on the east coast of New Caledonia. The
balance of the overseas ore required for the plant is expected to be obtained
from a Joint Venture between Société Minière Georges Montagnat ("SMGM") and
the Company on an arm's length laterite ore purchase arrangement (as announced
on the 13 August 2007).
    The consumption rates of reagents and consumables have been estimated by
Aker Kvaerner as part of completing the IDFS. Prices for key reagents such as
sulphur, anhydrous ammonia, and limestone, flocculent and quick lime have been
based on either long term market prices or supplier quoted long term contract
prices. In addition shipping costs have been calculated based on 10 year long
term shipping contract rates provided by industry experts.
    A full labour list has been developed for the proposed operations with an
estimated 530 employees required at the Gladstone plant. Labour rates have
been based on Industry Surveys in the Gladstone region.
    Maintenance material costs for the refinery are estimated at US$45.5
million per year based on percentages of direct capital costs of plant,
equipment and infrastructure. Additional mine maintenance estimates were
provided by our mining consultants IMC and SRK for both Marlborough and New
Caledonia respectively.
    Average expected feed grades from the mines has been used to estimate the
nickel metal production of 63,000 tonnes per annum and cobalt metal production
of 6,200 tonnes per annum which is a slight increase from previously announced
tonnages.
    The Gladstone Nickel Project is expected to have a C1 cost, according to
Brook Hunt definitions, at full production of US$2.19/lb in 2007 dollars. This
positions the Project very favourably in the 2nd quartile as compared to the
expected 2013 C1 cash costs across the industry reported by Brook Hunt in its
2006 Nickel Industry Cost Study.

    John Downie
    Chief Executive Officer

    This news release includes certain statements that may be deemed
"forward-looking statements". All statements in this news release, other than
statements of historical facts, that address future exploration drilling,
exploration activities and events or developments that the Company expects,
are forward looking statements. Although the Company believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those in
forward-looking statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include metal prices,
exploration success, continued availability of capital and financing, and
general economic, market or business conditions.

    ------------------------------
    (1) Operating costs calculated using long term exchange rate forecast of
    US$0.7 = A$1.0 and after cobalt and other credits. N.B. Both
    UBS and ABN AMRO are forecasting exchange rates of 0.70/0.71 respectively
    after the 2009 financial year.

    (2) Capital cost calculated as at August 2007 using medium term exchange
    rate forecast of US$0.8 = A$1.0





For further information:

For further information: Enquiries to: Gladstone Pacific Nickel - Tel:
+61 (0) 7 3211 8899, Chris Caldwell - Insinger de Beaufort - Tel: +44 (0) 20
7190 7000, Simon Rothschild - Bankside Consultants - Tel: +44 (0) 20 7367
8888; Web: www.gladstonepacific.com.au, Email: info@gladstonepacific.com.au,
Suite 9 Level 3, 320 AdelaideSt, Brisbane, Qld 4000, Australia, GPO Box 111,
Brisbane, Qld 4001, Ph: +61 (0) 73211 8899, Fax: +61 (0) 73211 8688

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Gladstone Pacific Nickel Ltd.

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