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post Posted: Jan 14 2009, 09:24 AM
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and another from proactive

Better news for Rusina Mining at Acoje
by David Rowland

When Proactive last covered Rusina, a mere month or so ago, Rusina CEO Rob Gregory had just announced the loss of Rusina’s usual revenue stream. After some careful belt tightening, cash was set to stretch past summer 2009, while European Nickel continued to move the Acoje nickel laterite project onward through pre-feasibility.

At the time Rob Gregory hinted that it wasn’t just a question of hunkering down until the long economic winter eventually thaws. Proactive hadn’t thought to be writing another article so soon, and it makes a change to report news that bucks the general gloomy trend.

For more detail on the projects mentioned here, interested readers are referred to a wealth of background information in previous articles this year.

Hors d’oeuvres.

Direct shipping of Acoje’s laterites has never been the main game, but was a very handy starter operation while it lasted. Depressed nickel prices mean it will be a while before this resumes in earnest, but a Japanese buyer has recently taken delivery of a trial shipment of 7,500 tonnes of nickel laterite ore, shipped by Rusina’s Philippine partner, DMCI. The change is that the ore was 2.15% nickel, almost double the average grade and significantly higher than past shipments. A certain amount of high-grading won’t do significant damage to a laterite tonnage of 50MT (two-thirds indicated, the rest inferred) and further shipments are possible. Margins are low but it all helps.

Main Course.

The ‘main course’ for Rusina is the 40:40:20 joint venture between Rusina, European Nickel and DCMI to process the bulk of the Acoje laterites, using European Nickel’s heap leach technology. Crudely, this involves mining the near-surface laterites (strip ratio 0.46), and subjecting it to European Nickel’s proprietary heap leach technology. Most people know that nickel laterites can be difficult to process, but European Nickel’s technology is known to work well at Caldag in Turkey.

Rusina and European Nickel have just published the pre-feasibility study, and it is good news. In addition to opex costs of $3.10/lb – notably economic below today’s $4.40/lb nickel price – the study features an Internal Rate of Return of 28.3%, 3-year payback and forecast annual sales of US$260m, inclusive of by-product credits (mainly cobalt). This translates to US$108 million of free cash flow annually. The study assigns a post-tax NPV of US$375 million using a 10% discount rate and notes there is quite a bit of potential to improve on these figures by extending the mine life.

There are two routes to increase the resource. The first is by infill drilling and firming up all the Inferred resource (40%) to Indicated status (currently 60% of the resource). The second route is by adding tonnage from the Zambales Chromite deposit, and the combination is expected to extend the mine life beyond 20 years by the time the Definitive Feasibility Study is published.

All this is predicated upon a long-term nickel price of $6/lb and cobalt at $10/lb, which should be realistic, bearing in mind that operating nickel mines are falling by the wayside in today’s price environment. Supply-side factor will kick in once Chinese stockpiles clear next year.

For the technically minded, the leaching agent is dilute sulphuric acid. Sulphur prices have retreated by a factor of 8 from their peak, which means Rusina are more likely to source prills from abroad and burn them on-site than use pyrites from the recently acquired Barlo tenement. Electricity is a nice by-product from the sulphur-burning process and can be sold back to the grid. Incidentally, Barlo holds interesting metal potential in its own right, and if not needed for sulphuric acid, Barlo’s pyrites will be gladly taken by the fertilizer industry.

The nickel will be recovered in a precipitation plant in a two stage concentration process producing two saleable products. The first stage primary nickel product ("PNP") will contain 39% nickel and 1% cobalt and the second stage nickel product (SNP) will contain 25% nickel and 1% cobalt.

The next stage is a trial operation which will contribute to the bankable feasibility study. Rusina is currently constructing the trial pads that will start being irrigated early 2009, and plans to employ a Chinese EPC (Engineering Procurement Construction) contractor. Since the plant is basically a copy of European Nickel’s operation at Caldag, Turkey, it makes sense for speed, economy and accuracy to employ the Caldag contractors, and the added links to China won’t hurt either.

Regulars will know that EN are earning their 40% by paying US$10m for the development to full Definitive Feasibility stage, so there is no drain on Rusina’s cashflow. The DFS should be complete by the end of 2009, at which point $498m in funding will need to be found, pro rata to the JV ratios. This includes 10% contingency. How will this be found? There are options, but let’s see how the market lies in H2 next year.


Dessert comes in the form of some surprise drilling results. Back in the September operational update, Rusina reported assorted results at Acoje. Part of this was to explore the chromite potential of the property – regular readers will remember that Acoje was originally a metallurgical-grade chromite mine which produced for over fifty years. Drilling targeted three near-surface virgin loads for extensions beneath their outcrops, with one additional deep (320m) hole exploring beneath the old workings. PGMs were also assayed.

The deep hole confirmed high grade chromite intercepts, including 6.05m of 44.4% chromite and another intercept of 3.60m at 42.9% chromite. This would be exploited from tunnel extensions to the old underground mine and wouldn’t come cheap, although the near-surface pods close by are an easy bonus. A joint venture partner would be needed, and Rob Gregory reckons an end user smelting group would make an ideal match, not least because it would eliminate marketing costs. Speaking of costs, chromite prices are down from $450/t to $200/t, and opex costs would likely be under $100/t. However, there’s a long journey to travel before feasibility studies begin.

What made some of us sit up were the anomalous PGM results that were returned within the massive chromite, including 0.4m at 1758 ppb platinum and palladium (1.76 g/t Pt + Pd), with palladium as the dominant component. Previously, the PGMs were thought to be restricted to black dunite nickel sulphide pods, which are quite separate from the chromite mineralisation, but if Rusina eventually exploits the chromite, these PGMs are virtually a free bonus. More intriguingly, it opens up new geological interpretations. Watch this space.

post Posted: May 22 2008, 08:38 PM
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In reply to: RADIO on Tuesday 06/05/08 11:43am

New article from Proactive investor on Rusina - enjoy!

Plenty of water has flowed under the bridge at Acoje since Proactive last covered Rusina a little over a year ago. Since cash drowns out all other voices, let\'s start with that.

Rusina has plentiful cashflow.
Rusina\'s FD should be a very chirpy chappy these days. Rusina is banking regular cheques and does not need money. Shipments of around 50,000 wet tonnes of laterite ore are making their way from the Philippines to China every 10 days or so. According to the company\'s own profit / grade / nickel price graph, Rusina should net between $US10m and US$20m in annualised operating profit at current grades and prices and more than covers Rusina\'s exploration spend. Not bad for a company with a £30m (AUD62m) market cap, especially when you consider the 830KT of nickel Rusina is sitting on, not to mention chromite and PGMs.

That\'s pretty much diving in at the deep end. Let\'s clamber out and view Rusina and its projects from the high board.

Dual-listed Rusina owns numerous properties in the Philippines, but leading the pack by a country mile is Acoje. Acoje is a large tenement with a 15km strike length in the north of the Philippine archipelago, conveniently near the coast of China – in fact the nearest laterite deposit to the resource-hungry behemoth.

Acoje is geologically complex and hosts several different styles of mineralisation including nickel laterites, chromite and PGMs. Rusina has evolved a strategy for extracting value from each of these, involving crucial joint ventures with big fish Philippine partner DMCI, and a second with European Nickel. DMCI already owns 20% of Acoje.

Short-term cashflow is already coming from the at-surface laterites which comprise limonites, overlying rather harder but higher-grade saprolites. JORC resources of both types amount to 48.8MT (80-90% indicated) at 1.13% Ni. It is the lower-grade scrape-off-the-surface limonites which are currently being exploited for quick cashflow.

Rather than employ its own mining fleet, build a port, market and finally ship the ore, MD Rob Gregory chose to joint venture the project with experienced Philippine operator DMCI. The price – 50% of the profits – represents a good deal, for two reasons. Firstly, it eliminated Rusina\'s need to find capex. Secondly, it utilised DMCI\'s mining skills, personnel and contacts – DMCI provides the workforce and absorbs more than its fair share of operating risk. However, this deal is for just 5MT over 5 years – 10% of the Acoje laterite resource. It puts bread on Rusina\'s table but it is not the long-term future.

The shipping alliance is just the first project of several in a flourishing partnership with DMCI. Also in the pipeline, Rusina and DMCI are fast-tracking a feasibility study to process further Acoje laterite ore, to the tune of 5-6,000tpa of nickel metal. This is a very different project which looks to use DMCI\'s nearby Semirara coal mine to fuel a calcine kiln and probably even an electric arc furnace. The idea is to create and ship a more remunerative intermediate product. If it ultimately goes ahead, Rusina will enjoy a free carry of 40%. Rusina\'s challenge will be to provide saprolite ore at a consistent grade of 1.7% or better. The end product would be an added-value nickel / iron product in one of several forms, depending upon which of four processes is finally adopted. It is to some extent reliant upon buoyant nickel prices which those smart people who study these things say will be around for the next 5 years or so.

European Nickel.
Nickel prices cannot be buoyant forever, though, and this is where Rusina\'s parallel joint venture agreement with European Nickel comes in. There is also the question of size; the first two projects are limited in scope, but there are 49MT of laterite at Acoje to exploit, and another 23MT at almost identical grades at the ZCMC property next door. Therefore, the Joint Venture with European Nickel is hugely important.

As a rule, inexpensive heap leach technology doesn\'t work well for laterites, but tropical high-clay laterites seem very amenable to a process technology jointly owned by European Nickel and BHP, which Gregory describes as world-leading. A pre-feasibility is underway for what should be a low opex method of producing a nickel hydroxide product attracting 75% of the LME nickel price – five or six times greater per shipload than the current ore, with consequent transport cost reductions. 95% recoveries after just 3 weeks on preliminary metallurgical tests suggest that the project should be viable down to a nickel price of $3/lb – a quarter of what it currently is, and securing Acoje\'s long-term future. The very nice fillip is that heap leaching should also recover the cobalt trapped in the laterites, effectively raising the nickel grade from 1.13% to around 1.5%. Cobalt is wasted in the current ops.

The only major consumable in this process is sulphuric acid, which happens to be a sulphide-deposit by-product. Hence the recent acquisition of the Barlo tenement, just 18 miles away can be an effective hedge to wayward acid prices. This property used to be owned by the company which ran Acoje, and current employees from those days are familiar with it. It should fit well.

$500m is a guesstimate for capex. At that point, Rusina would need money, but only 40% of it. DCMI are onboard with this and retain a 20% interest, while European Nickel are earning in to a 40% share. They recently raised their stake in Rusina to 3.6% and are very keen, having been stalled at their Turkish Caldag project. One man\'s meat…

Acoje PGMs and Chromite.
Starting in 1935, Acoje was mined for chromites for well over half a century, and there are around 50km of old drives. Despite this, much of the deposit is still reported to be intact. Mining stopped because of a combination of low mineral prices and flooding of the lower levels.

Gregory reckons enquiries about restarting mining the chromite, which is particularly high-quality, are a weekly event. His stock answer is "not soon". It will take quite a bit of drilling to prove up a resource, and capital investment of $30-50m to get a mine up and running again. However, quality chromite fetches over US$300/t compared to US$70/t when mining ceased, so is very high on the agenda. The eventual plan is to engage another partner to exploit this deposit. Confidentiality agreements have already been signed.

The sweetener for a potential partner is that both PGMs and nickel sulphide are strongly associated with the chromites. PGMs at Acoje tend to occur in multiple small pods of higher concentration where these contact chromites. Rusina is currently sinking exploration holes in the six most promising of some 57 IP anomalies. Previous grades include 6.5m at 9.87g/t and 6.9m at 6.76g/t PGM.

In the meantime, \'lump chromite\' is lying about on the surface of the neighbouring Zambales chromite property, said to have 1MT of the stuff. Local \'garimpeiros\' were active at Zambales, but Rusina has astutely turned this annoyance to advantage, and now employ them to find the lump chromite. Rusina are allowed to move and ship 3,000 tonnes per month from the property, fetching about US$1m pa. A nice bonus.

According to Rob Gregory, DMCI views Rusina as its exploration arm, and this is nowhere clearer seen than Sodaco (40% Rusina, 60% DMCI). Sodaco is probably the most interesting of a number of exploration properties that came bundled with the DMCI joint venture, not least because it exists completely inside Xstrata\'s Tampakan property. Tampakan houses an eponymous world-class copper-gold mine containing 2.2BT of copper. It turns out that Sodaco houses a rather sweet-looking IP hot spot which Rusina will be drilling as soon as exploration permits allow. If it proves similar enough to the Tampakan mine, Rusina and DMCI may well be sitting down with Xstrata to negotiate a deal. Sale would provide handy cash for capex elsewhere.

The Investment Case.
Nothing is without risk, but Rusina has done a lot to mitigate it through its joint ventures. Politically, where one hears of communist or Islamic insurgencies, these are generally in the southern islands and well away from Acoje.

In an environment where delays are standard and cost-overruns are the norm, Gregory and his team are to be congratulated on timely performance, high-quality joint ventures and the achievement of early cashflow with no capex worthy of mention. Like virtually every other junior miner and explorer, Rusina is undervalued, but if management track record is taken into account, Rusina could justifiably trade at a premium. £30m for a company already producing over £5m free cash pa from a modest start-up operation is hardly demanding.

post Posted: May 6 2008, 11:43 AM
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Recent Radio Broadcast (30/04/2008 19:30:00):
RML - March 2008 Quarterly Activities Report - Mr Rob Gregory, MD and CEO

N.B. Radio can normally be accessed by the 'RADIO' link, top of every page.
------------------------------------------------------------------------------------------------------------- Radio delivers investor presentations from ASX listed companies. Keep up to date with the latest corporate dealings of the shares you follow. Hear news direct from the source. Listen to directors and investor relations mangers discuss their company, give investor updates and brief on current results. Radio keeps you informed about company announcements and events, and provides you daily market wraps and industry discussions.

post Posted: May 5 2008, 04:56 PM
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In reply to: FLOYD2 on Monday 05/05/08 02:01pm

Thanks FLoyd2 and CPDLC. Some very good points. I agree patience is need. I hope the SP will over time respond similar to CMR. For now it is a long wait. I think when it gets over 40 cents then it will be a slow climb to something spectacular. Not an overnight success story here.

I have liked RML for some 5 years. Been in and out a bit. At the moment holding a good parcel.

After a certain point, money is meaningless. It ceases to be the goal. The game is what counts.
- Aristotle Onassis
post Posted: May 5 2008, 02:01 PM
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In reply to: CPDLC on Sunday 04/05/08 11:47pm


Nothing in FAT P recently that Ive seen and I always keep a lookout for RML.

For what it's worth, is exciting that the main focus for so long ie the PGMs, now has 'cream on the cake' status.

Hopefully a classic case of patience being rewarded.


post Posted: May 4 2008, 11:47 PM
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In reply to: ozybuddy on Sunday 04/05/08 10:37pm


I think a number of factors are in play:

The options expiry was a big drag on the SP - and that is now history

The DSO operations are now providing an income stream to fund further drilling

The EN Heap Leach feasibility is progressing and ENK (in London) is starting to recover - which may be drawing new interest to RML

The recent move by DMCI to bring in a Chinese partner for it's proposed smelter proposal appears to indicate that this could be a very useful value-added addition to cashflow in the near term. Incidentally, DMCI say that the required CAPEX (~ $65m) is easily obtained internally - so they are not looking for any equity from a partner, just expertise!

Under-scoring all of the above is the sheer scale of the Acoje and Zambales deposits which, with a combined total of over 800,000t of Ni and 48,000t of Co (and growing) represent around $27b of contained metal @ current prices.

Even after discounting for Mineable%, Completion%, Payable Ni%, Payable Co%, these deposits still represent around $10b of value @ current prices if the smelter and HP programmes are followed through.

For a minnow like RML to have 40% attributable on these projects should propel the SP over time.

In addition we are now hearing more about the Chromite/PGM potential. Bit early days to make much of an assessment, but exciting none the less.


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post Posted: May 4 2008, 10:37 PM
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good volume and SP this week. DOes anyone know if Fat prophets had anything to do with recent demand. I no longer subscribe to them but last year when I did I noted when ever they gave a recomend on RML the SP went well up.

Anyone know if they have recently which would explain to me last weeks SP

After a certain point, money is meaningless. It ceases to be the goal. The game is what counts.
- Aristotle Onassis
post Posted: Jan 17 2008, 12:44 PM
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In reply to: datum on Tuesday 08/01/08 11:02pm


rml included as a HOLD in most recent Fat Prophets report as their favoured emerging nickel producers. Their view is nickel price should move favorably in the med term.

post Posted: Jan 8 2008, 11:02 PM
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thanks, floyd, for that update

bit of news from the london/uk listed bourse,
they seem to get updates a day before we do.

LONDON (Thomson Financial) - European Nickel PLC said it has expanded its joint venture agreement with Rusina Mining NL for the Acoje nickel deposit on Luzon Island in the Philippines.

The company said the joint venture has been expanded to include the recently purchased nickel laterite deposit on the nearby area covered by the Zambales Chromite (ZC) licence, adding that it reported a significant increase in its Philippine mineral resources.

European Nickel said the parties have also completed the acquisition of the mineral production sharing agreement for the ZC deposit for a total of 2.05 mln usd. ssr/jrr

This is not a bottom draw stock. This is a stock you take to the grave with you.
post Posted: Jan 3 2008, 01:07 PM
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In reply to: datum on Tuesday 18/12/07 12:08pm


In their Xmas newsletter gave RML a favourable outlook (but just by way of general comment as part of a (resources) sector by sector review).


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