Mirabela Nickel - 30% increase in Santa Rita resource - Planned increase in size and scope of the project

    PERTH, Western Australia, Nov. 22 /CNW/ - Mirabela Nickel Limited
("Company") (TSX - MNB, ASX - MBN). Mirabela Nickel is pleased to announce an
increase of 21 million tonnes in Measured and Indicated Resource within open
pit limits at its Santa Rita nickel project in Brazil. This represents a 30%
increase in the in-pit resource since the previous estimate in June.
    Nick Poll, Managing Director of Mirabela, said the results move
Mirabela's primary Measured and Indicated Resource to 90 million tonnes at
0.60% Ni and reaffirm Santa Rita's status as one of the world's largest new
sources of nickel. An additional 10.7 million tonnes of Inferred Resource
grading 0.60% Ni also lies within open pit limits.
    "This is a substantial increase in resources, which further cements Santa
Rita's position as one of the largest and most exciting new discoveries of
nickel sulphide for many years and takes the project to the next level in
terms of potential nickel production," Mr Poll said.
    Mr Poll said Mirabela was working to deliver increased production
capacity at Santa Rita. "Studies are already underway to increase capacity
from the current 4.6 mtpa capacity to above 6.0 mtpa within the first year or
two of operations. This would result in production of more than 25,000 tpa of
nickel in concentrate, up 35% from the currently planned capacity."
    "Annual production of 25,000t of nickel and a mine life of at least 17
years will make Mirabela the largest independent nickel producer in the world
and there are only a handful of producers that can source this amount of
production from one open-cut mine," Mr Poll said. "This is encouraging
Mirabela to look even harder at downstream processing options, such as a
smelter, to capture as much value as it can from the resource base," Mr Poll
    The strength of the resource at depth is encouraging plans for possible
underground mining operations to augment the open pit. The Company has
commenced a new drilling program to prove up deeper resource with underground
potential and studies are underway to determine the best underground mining
methods and likely costs.
    "Santa Rita has the low capital and operating costs associated with Ni
sulphides, but the size normally associated with Ni laterite projects. We are
now targeting a total resource of over one million tonnes of contained Ni. The
project is permitted and under construction, with commissioning expected in
mid 2009. With the resource continuing to increase, further expansion of the
mill and the potential addition of a smelter give Santa Rita excellent growth
potential," said Mr Poll.

    Primary Resource

    The updated Potential Mill Feed Resource (this is the estimated resource
available as mill feed based upon a pit optimisation study) is:

               Primary Resource - Potential Mill Feed Estimate
                       (indicative strip ratio 7.6:1)

    Category             Million       Ni         Cu       Tonnes    Million
                          Tonnes                             Ni       lbs Ni
    Measured                 8.8      0.68%      0.17%     60,000        130
    Indicated               81.2      0.60%      0.16%    480,000      1,060
    Measured + Indicated    90.0      0.60%      0.16%    540,000      1,190
    Inferred                10.7      0.60%      0.17%     64,000        140
    Includes 5% ore loss. Weighted average cut-off grade - 0.36% Ni. See
    Attachment 2 below.

    The new Measured and Indicated Resource (90.0mt grading 0.60% Ni)
represents an increase of 30% above the in-pit resource announced in June 2007
(69.2mt grading 0.61% Ni) and 94% over the in-pit resource announced in
October 2006 (46.4mt grading 0.61%). This substantial increase exceeds
expectations and reflects excellent drilling results extending and widening
the resource in the southern half.
    In additional to the increase in tonnes, a higher proportion of the
resource is hosted by pyroxenite (up from 41% to 58%). This increases the
expected average Ni recovery from 67% to 70%, as the pyroxenite unit has less
non-recoverable (silicate) nickel. This is a substantial added benefit from
the recent drilling.
    Pit optimisation studies for the Santa Rita resource were undertaken by
independent consultant Croeser Pty Ltd using the following parameters:

    -   The operating costs from the bankable feasibility work announced July
        2007 increased by 16% (representing an 11% reduction in the long term
        exchange rate to US$:2.00 Real and a 5% general cost escalation)
    -   Latest pit slopes as recommended by Brazil-based geotechnical
        consultants VOGBR
    -   A nickel price of US$7.00/lb

    Secondary Resource

    In addition to the Primary Resource (average cut-off 0.36% Ni) there is a
halo of lower grade mineralisation (average cut-off 0.26% Ni) within the same
pit shell. This lower grade mineralisation is free at surface as it is mined
as waste when the Primary Resource is mined.

              Secondary Resource - Potential Mill Feed Estimate
                    (within same pit as Primary Resource)

    Category             Million       Ni         Cu       Tonnes    Million
                          Tonnes                             Ni       lbs Ni
    Measured + Indicated    38.2     0.31%       0.07%    118,000        260
    Inferred                 3.4     0.29%       0.08%     10,000         20
    Includes 5% ore loss. Weighted average lower cut-off grade 0.26% Ni and
    upper cut-off grade 0.36% Ni. See Attachment 2 below.

    Without any mining cost, this Secondary Resource is cashflow positive
through the Mill. However, to maximise the net present value of the project
this mineralisation needs to be processed at the end of the project rather
than displacing the higher cashflows generated by the Primary Resource in
earlier periods. Accordingly, the Secondary Resource will be stockpiled and
treated at the end of the project after all Primary Resource is exhausted.
This will add significant life to the project.
    Similar operating costs as in the bankable feasibility results announced
July 2007 are applicable to the Secondary Resource except that the mining cost
is nil and the royalty and concentrate transport costs per tonne are reduced
in proportion to the lower recovered Ni per tonne (i.e. reduced by 63%). The
estimated average Ni recovery for the Secondary Resource is about 50%, which
reflects a higher percentage of non recoverable (silicate) Ni in lower grade

    Potential Underground Resource

    A substantial part of the Primary Resource upgrade is derived from the
recently discovered zone of mineralisation known as the southern high grade
zone. This zone appears to have good continuity below 200m vertical depth and
along 240m of strike averaging 88m true width and 0.79% Ni. Approximately 80%
of the southern high grade zone mineralisation is hosted by the preferred
pyroxenite unit. The zone remains open at depth. There is also underground
resource potential beneath a central high grade zone where about 140m of
strike averages 42m true width and 0.77% Ni.
    These widths and grades are likely to be economic for bulk underground
mining. Any depth extension of these zones below open-pit limits has the
potential to add a significant underground resource to the Santa Rita project.
The Company is now targeting this underground resource potential and recently
commenced a new drilling program to test depth extensions in these areas.
    An underground resource is likely to be mined towards the end of the
existing project and blended with the Secondary Resource to keep the Mill
operating at full capacity. The Secondary Resource thereby alleviates the need
to mine an underground resource at the full annual throughput rate. This
combination has the potential to add considerable life to the Santa Rita

    Drilling To Date

    The following table summarizes the diamond drilling at Santa Rita
completed to date:

    Santa Rita resource                  Drill holes   Approx meters drilled
    Oct 2006 resource estimate                   244                  56,000
    June 2007 resource estimate                  313                  73,500
    Latest Nov 2007 resource estimate            378                  93,750
    Total resource drilling to date              426                 106,900

    The new resource is based on 378 drill holes compared with 313 holes for
the previous mineral resource. A further 44 holes have been drilled since
commencement of the resource estimate, but assays were pending at the cut-off
    This includes recent holes in the newly discovered South-East Extension
area where excellent results were recently announced. Drilling is also
continuing underneath the southern high grade zone where, given the consistent
80m+ intersections, the pit is likely to drive deeper, and even deeper
drilling in this area recently commenced to prove up potential underground
resource. Also, further drilling is planned for the southern end of the
Southern zone where existing drilling is not yet deep enough to test potential
pit limits.
    The Company believes additional Southern deeps, South-East Extension and
underground resource drilling is likely to add significant further resource.
Drilling is ongoing with 5 diamond drilling rigs on-site.

    Updated Santa Rita Resource Targets

    The recent favourable drilling results have lead to a revision in the
target size of the Santa Rita project. The Company's ongoing drilling programs
are now targeting the following:

    Santa Rita                     Grade     Current      Target      Target
                                                (mt)        (mt)  (Ni tonnes)
    Primary Resource (In-pit)      0.60%          90        120+     720,000
    Secondary Resource (In-pit)    0.31%          38         50+     155,000
    Underground Resource           0.75%         nil         30+     225,000
    Total                          0.55%         128        200+   1,100,000

    The target Primary and Secondary resources require conversion of current
Inferred resources to Indicated and a further 20% increase in the in-pit
resources. The Company is aiming to achieve this through deeper drilling
across the whole Southern zone and by drilling up the new South-East Extension
    The Underground Resource is purely a conceptual target. It requires
continuity of the southern high grade zone at similar widths and grades for a
further 500m below the pit limits. This is yet to be drill tested.

    Increase in Size and Scope of the Santa Rita Project

    This resource upgrade, and the potential for more resource, increases the
scale and scope of the Santa Rita project. The Company now intends to
construct the Mill with a throughput of 4.6 mtpa (previously the Mill was to
be commissioned at 4.0 mtpa and then increased within 12 months). Further, the
Company is now planning to increase the Mill throughput to 6.0+ mtpa within
one to two years of commissioning. The Mill will be designed to allow for such
an expansion.
    The Company will release updated capital and operating cost numbers for
the 4.6 mtpa Mill shortly. A preliminary estimate of the Mill expansion
capital cost will also be released in due course.
    With Santa Rita having a potential mine life of over 30 years at 6 mtpa
throughput, the economic imperatives of constructing a smelter on-site are
stronger than ever. The Company has adjusted the smelter scoping study by
increasing the planned throughput to 230,000 tonnes of concentrate pa. The
smelter would convert Santa Rita concentrates grading about 12% Ni into a
matte grading 50-60% Ni, thereby attracting a higher payability and
substantially reducing transport costs.
    A possible option for the Company is to construct the smelter in joint
venture with an established smelter operator and this partner would then
purchase the matte off-take. This would mitigate the financial and technical
risks of the smelter project, whilst providing the Company with savings on
concentrate transport costs and participation in the smelter. Under current
planning, the smelter would be commissioned about two years after the Mill
taking advantage of the established infrastructure of the existing project.
    The Company is working closely with WorleyParsons to undertake more
detailed studies into this concept and will announce results of this work as
they come to hand.

    Updated Global Mineral Resource

    The updated mineral resource estimate for Santa Rita is:

                          Mineral resource estimate

    Category             Million       Ni         Cu       Tonnes    Million
                          Tonnes                             Ni       lbs Ni
    Measured                11.0       0.62       0.15     68,000        150
    Indicated              125.2       0.51       0.13    638,000      1,400
    Measured + Indicated   136.2       0.52       0.13    706,000      1,550
    Inferred                20.7       0.52       0.14    107,000        235
    Weighted average cut-off grade - 0.26% Ni. See Attachment 2 below.

    This resource estimate has been independently reviewed by Coffey Mining
Pty Ltd in accordance with the Australian JORC Code and the Canadian CIM
guidelines. For technical details in relation to the calculation of the
resources see Attachment 1.

    (signed)                          (signed)
    Nick Poll                         Craig Burton
    Managing Director                 Corporate Director

    The information in this report that relates to Mineral Resources and
Exploration Results is based on information compiled by Lauritz Barnes who is
a Member of The Australian Institute of Geoscientists, and Brett Gossage, who
is a Member of The Australasia Institute of Mining and Metallurgy. Lauritz
Barnes is consultant to Mirabela Nickel Limited. Brett Gossage is the Senior
Principal with Coffey Mining Pty Ltd, independent resource consultants engaged
by Mirabela Nickel Limited.
    Lauritz Barnes and Brett Gossage have sufficient experience which is
relevant to the style of mineralization and type of deposit under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserve' and are
each a Qualified Person in accordance with NI 43-101. Lauritz Barnes and Brett
Gossage consent to the inclusion in the report of the matters based on their
information in the form and context in which it appears.
    The information in this report that relates to pit optimization and
scheduling studies is based on information compiled by Roselt Croeser who is a
Member of The Australasia Institute of Mining and Metallurgy. Roselt Croeser
is a consultant to Mirabela Nickel Limited. Roselt Croeser consents to the
inclusion in the report of the matters based on his information in the form
and context in which it appears.
    All other technical information in this report has been reviewed by
Nicholas Poll, who is a Member of The Australasia Institute of Mining and
Metallurgy. Nicholas Poll is the Managing Director of the Company. Nicholas
Poll consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.

    Caution Regarding Inferred Resources: Inferred resources are, by
definition, of insufficient confidence to have economic considerations applied
that would enable them to be categorised as mineral reserves, and there is no
certainty that any preliminary assessment will be realised in respect of such
resources. In the present case, the Inferred resources comprise about 11% of
the total resource estimate.

    Caution Regarding Forward Looking Statements: The forward-looking
statements made in this announcement are based on assumptions and judgments of
management regarding future events and results. Such forward-looking
statements, including but not limited to those with respect to resource
targets or the development of a mine and/or a smelter at Santa Rita and the
Company's capital expenditures and estimated future production involve known
and unknown risks, uncertainties, and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any anticipated future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among
others, the actual market prices of nickel, the actual results of current
exploration, the actual results of future mining, processing and development
activities, changes in project parameters as plans continue to be evaluated,
as well as those factors disclosed in the Company's filed documents.

    Attachment 1: Technical background on resource estimate

    The resource has been classified in accordance with Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) guidelines and with reference to the
criteria set out in the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code, December 2004). The
estimation has been carried out by a Competent Person from the Company and a
Competent Person from Coffey Mining Pty Ltd in accordance with the Code and as
such is suitable for inclusion in a public report.
    In total, the grade interpolation dataset used for the resource estimate
consisted of 378 diamond holes. All drill core has been logged in detail for
lithological and structural information. Nickel and multi-element assaying has
been completed on half core samples using inductively coupled plasma atomic
emission spectroscopy (ICP-AES) and inductively coupled plasma mass
spectroscopy (ICP-MS) methods with appropriate collectors (for example 30g
fire assay for Pd, Pt and Au). All assaying is accompanied by rigorous
submission and analysis of QAQC samples. An extensive specific gravity
database has been collected by weighing of diamond core in air and water.
    The resource model was derived via geological and mineralisation zone
modelling of the deposit. Estimation involved the application of Ordinary
Kriging in panels of 20m E-W by 25m N-S by 5mRL for Ni, Cu, Co, Pd, Pt, Au,
Fe, Mg and S with Uniform Conditioning change of support for Ni only for a
base case selective mining unit of 5mE by 10mN by 5mRL. Technique selection
was based on the quantity and spacing of available data, and the interpreted
controls on, and styles of, mineralisation under review.

    Attachment 2: Details on cut-off grades used

    A variety of cut off grades are required for each ore type, because they
vary in olivine content. Olivine contains non-sulphide nickel that is not
recoverable (silicate nickel), so lower olivine content increases nickel
recovery and reduces the corresponding cut-off grade. Mineral resource grades
reflect the combined sulphide and silicate nickel content, because assay
technology is not accurate enough to measure sulphide nickel content alone for
mineral resource estimation.
    There are four different types of mineralised rock. Each has a different
cut-off grade depending on its non-sulphide nickel content. Pyroxenite has a
low cut-off grade to reflect low olivine and low non-sulphide nickel content,
whereas dunite has a high cut-off grade to reflect high olivine and high
non-sulphide nickel content. The table below provides a breakdown of the
resource rock types, their associated cut-off grades and a comparison with the
previous (June 2007) estimate.

       Comparison of cut-off grades between new and previous potential mill
                                feed tonnages

                            November 2007 estimate        June 2007 estimate
    Host rock type         Percentage      Cut-off   Percentage      Cut-off
                          composition        Grade  composition        grade
    Pyroxenite                     58        0.32%           41        0.35%
    Olivine Orthopyroxenite        14        0.35%           15        0.40%
    Harzburgite                    25        0.45%           40        0.40%
    Dunite                          3        0.50%            4        0.50%
    Weighted average
     cut-off grade               100%        0.36%         100%        0.38%

    In addition, a lower resource cut-off grade has been used as set out

                       Details for lower cut-off grade

                                                Lower cut-off grade resource
    Host rock type                                   Percentage      Cut-off
                                                    Composition        grade
    Pyroxenite                                               58        0.22%
    Olivine Orthopyroxenite                                  13        0.25%
    Harzburgite                                              26        0.35%
    Dunite                                                    3        0.40%
    Weighted average cut-off grade                         100%        0.26%

For further information:

For further information: Nick Poll, Managing Director, Telephone: +61 8
9324 1177, Facsimile: +61 8 9324 2171, Email: info@mirabela.com.au

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