Mirabela Nickel Limited - CAPEX update for larger 4.6 MTPA Santa Rita project


    Ordinary shares outstanding: 126,871,100

    PERTH, Australia, Jan. 23 /CNW/ - Following the recent (22 January)
announcement of the first mining reserve for the Santa Rita nickel project,
Mirabela Nickel Limited (TSX: MNB, ASX: MBN) is pleased to announce a capital
expenditure (CAPEX) update for the project as follows (all costs in US$
dollars unless otherwise stated):

    US$ millions       Description

    267                Updated Plant and Infrastructure for 4.6mtpa project
    16                 Additional resource drilling
    10                 Additional surface land right acquisitions
    5                  Additional geotechnical drilling
    24                 8% contingency

    $322m              Total CAPEX

    The new CAPEX of $322m represents a 22% increase from the previous July
2007 estimate of $263m and reflects a 15% increase in production capacity from
4.0 to 4.6 million tonnes per year and a doubling of the Indicated resource
size to 90mt grading 0.60% nickel. It is expected that the project will remain
on track for a mid 2009 start.
    This latest CAPEX estimate follows signed contracts with the lead
providers of construction services with work under these contracts already
underway. About 80% of the new CAPEX is based upon firm contracts or final
quotes and 10% has already been spent, primarily on drilling, long lead-time
items and site infrastructure including a bridge, access roads and
accommodation facilities. The CAPEX estimate is for drilling and construction
of the Santa Rita project and does not include working capital, mining fleet,
finance costs and other activities of the Company. The capital cost of the
mining fleet is incorporated in the mine operating cost as previously
    The Company currently has US$152m in cash reserves. A debt financing
facility for up to $260m was mandated to BNP Paribas and Credit Suisse in
January, 2008. It is expected that the debt facility will be ready for
drawdown in mid 2008.
    "Since the original studies earlier this year, we have doubled the
resource size and increased the plant capacity from 4.0 to 4.6mtpa, so the 22%
increase in construction cost is a worthwhile investment, particularly as it
includes the additional cost of more drilling," said Managing Director Nick
Poll. "The increase also includes allowances for additional land acquisitions
and some larger equipment, such as a tailings thickener, which gives the
project more flexibility to move to a larger footprint and higher throughput
rates at a later date. We are already considering a move to increase nickel
output from 18,500 to 25,000t a year," he said.
    "Appreciation of the Brazilian Real has been a concern, but the new cost
structure takes this into account given the Company's forward exchange
contracts in place," said Mr Poll.
    Advanced negotiations are underway to sell the concentrate product to a
smelter. At the same time the Company is finalizing a scoping study to build a
smelter at Santa Rita and is expected to announce the results of this work
    The largest component of the CAPEX increase comes from a $16m allowance
to cover an additional 50,000m of drilling required to complete the drill out
of the much larger Santa Rita Resource. At the time of the previous CAPEX
estimate, the Santa Rita pit contained 46.4mt of Indicated Resource and now,
as a result of substantial strike and depth extensions, the Indicated Resource
is 90mt and growing.
    An allowance for additional land acquisitions totaling $10m has been made
in anticipation of the growing resource, a larger project footprint and a
possible smelter. An additional $5m will be required for geotechnical drilling
on a larger and deeper open-cut mine.
    The exchange rate used to prepare the CAPEX estimate has been adjusted
from R$2.05 to R$2.00 to reflect an appreciating Brazilian Real against the US
dollar. The total Real exposure is about 84% of total CAPEX, or US$270m. The
Company has now put in place forward exchange contracts to convert the entire
$270m to Real at a weighted average exchange close to R$2.00.


    Mirabela Nickel is listed on the Australian and Toronto stock exchanges.
With an in-pit Indicated Resource of 90mt at 0.60% Ni, Santa Rita is the
largest greenfields nickel sulphide discovery worldwide in the last 12 years
and the largest nickel sulphide deposit in Latin America. Exploration is
underway to determine underground mining potential below 500m deep, as
mineralization appears to continue well below current drilling.
    Construction of a nickel sulphide concentrator commenced in November 2007
and is progressing well. The plant is expected to produce 18,500t a year of
nickel in a sulphide concentrate from one open-cut mine starting from mid
2009. At this rate of production the project is expected to have a mine life
of at least 18 years. Studies are underway to increase nickel production to
25,000t a year.

    (signed)                                   (signed)

    Nick Poll                                  Craig Burton
    Managing Director                          Corporate Director

    The information in this report that relates to Exploration Results,
Mineral Resources or Ore Reserves is based on information compiled by Nick
Poll, who is a Member of The Australasia Institute of Mining and Metallurgy.
Nick Poll is employed by Mirabela Nickel Ltd. Nick Poll has 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'. Nick 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 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 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. There can be no assurance that the capital expenditures
required t construct a mine and related processing facilities at the Santa
Rita Project will be as expected, that the Company will successfully arrange a
project finance facility or that reserves and resources will be increased.

For further information:

For further information: Australia contact: Nick Poll, Managing
Director, Telephone: +61 8 9324 1177, nickp@mirabela.com.au; Toronto contact
(media): Eric Tang, Porter Novelli, Telephone: (416) 422-7200,
eric.tang@porternovelli.com; www.mirabela.com.au

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