Perth, June 6, 2008 (ABN Newswire) - Emerging nickel producer Nickelore Ltd (ASX:NIO) has opted for a 25,000-tonne heap leach demonstration plant at its Canegrass Nickel-Cobalt Project in Western Australia's Eastern Goldfields.

The plant will process 50,000 tonnes of ore and produce approximately 300 tonnes of nickel contained in the heap leach solution over two years to establish the potential for a full scale commercial plant at Canegrass 70 kilometres north west of Kalgoorlie.

The decision is based on detailed laboratory tests and a successful scoping study completed in March this year. The study found that Canegrass ore is ideal for heap leach processing, underpinning the potential for a robust A$865 million commercial operation generating A$182 million net cash flows a year (before tax) and an overall payback of 4.5 years.

An outline of the demonstration plant is included below.

Managing Director, Iggy Tan said that the pilot facility would be an important element of the feasibility study and technical risk assessment of a full scale process plant expected to produce 20,000 tonnes of nickel a year.

"We have been delighted with the results of our studies to date. Now it's time to test these results in an operational context," he said.

"The Company is currently pursuing capital raising opportunities to fund the next stage of development".

Demonstration Plant Concept

The Company is planning a heap leach demonstration plant which will further develop and prove up the heap leach technology.

The overall concept is for the construction of four by 6,250 tonne heap leach cells operating with an expected leach cycle of six to nine months, followed by two months' rinsing plus one month allowed for replacing leached material with freshly agglomerated ore.

Subject to funding, the detailed design work will commence in the next quarter.

The demonstration plant will process 50,000 tonnes of ore over the two year period and produce approximately 300 tonnes of nickel contained in the heap leach solution. The bulk of the heap leach solution will be sold to an existing nickel producer in order to recover some of the value from the nickel and cobalt in solution. Part of the heap leach solution will be used for metallurgical testwork and for proving up the downstream flowsheet.

Location of Demonstration Plant

The demonstration plant will be established on an unused tailings dam situated on Canegrass lease M24/39. This is an ideal location as the existing tailings infrastructure include a level site, clay base and dam walls which means minimal site works. The site is also very close to the project mining test pit at Patch-Gulch.

Water Supply for Demonstration Plant

A Bore Water Licence was granted by the Department of Water (DOW) on 25 January 2008 on L24/148 to extract water from the Bardoc Bore field, north of Canegrass. Flow tests were conducted during the end of last year to confirm that the field has sufficient water to supply the proposed demonstration plant.

Test Pit Location and Design

The Patch-Gulch test pit is located in the northern part of the fully optimised proposed mining area. The pit has a depth of thirty metres and an approximate volume of 292,900 cubic metres. The overall pit inventory will be able to supply all of the ore materials required for the demonstration plant.

Mining Approval & Clearing Permit

A Clearing Permit for mining of the first pit (Patch-Gulch) and to clear up to 60 hectares on ML24/290 and M24/39 (CPS 2171/1) was granted by DOIR on 16 February 2008. The Mining Approval Submission for Patch-Gulch pit including the heap leach demonstration plant is currently in progress.

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