REGIONAL NEWS - U.S. & CANADA

Engineering and Mining Journal, Sep 2007

Xstrata to Boost Raglan Mine Output to 2 Million mt by 2011

Xstrata Nickel said in early August that it plans to increase production to more than 2 million mt/y of ore at its flagship Raglan nickel mine in the Nunavik Territory of northern Quebec. This would almost double mine output over the current annual production rate of 1.1 million mt/y of ore. Plans are already under way to increase production to 1.3 million mt/y by the end of 2008; additional capacity to reach 2 million mt/y is expected to ramp up from 2011. After the expansion, Raglan will be one of the largest nickel mines in the world, with output approaching 50,000 mt/y of contained nickel in concentrate, together with copper and platinum group metal (PGM) by-products.

Xstrata stated in a press release that exploration results from the current drilling program added approximately 2 million mt of inferred resources at 3% nickel in Zone 5-8, located 4 km east of Katinniq, including an intersection of 63 m at 4.4% nickel and 1.6% copper. Zone 5-8 has now replaced Katinniq as the largest ore zone in Raglan's history, with a preliminary estimate of the current inferred resource of 10 million mt at 3.2% nickel, 0.8% copper, 0.08% cobalt, 0.9 g/mt platinum and 2.1 g/mt palladium, or 4% nickel equivalent.

Xstrata said its large land position in the Raglan belt has the potential to develop into one of the world's great nickel operations, which has prompted the expansion of the exploration program to continue developing new ore reserves. Over the next five years, around C$200 million is expected to be invested in exploration activities in support of the new production target. A dedicated expansion team has been established at Raglan to oversee both the revised exploration program, and the expansion studies that will be initiated to move toward this new production goal.

Ian Pearce, Xstrata Nickel Chief Executive commented: "Since beginning production in 1997, the Raglan mine has consistently delivered on its promise as one of the world's most significant, low-cost nickel mines and most attractive exploration camps. Our most recent exploration results are truly exceptional and confirm that Xstrata Nickel's Raglan property is located on one of the world's great nickel belts."

From its creation in August 2006, Xstrata Nickel will have invested more than C$125 million at Raglan by the end of 2007. This includes investment of C$104 million in total for projects currently under way to refurbish the existing Deception Bay wharf installations and to expand the operation's permanent accommodation facilities.

Xstrata said investment in Raglan also is delivering benefits to surrounding communities and stakeholders through employment and supply contracts, as well as through an annual profit-sharing program between Xstrata Nickel and local Inuit communities under the Raglan Agreement. Payments of C$26 million in total have been made to date to the Makivik Corporation under the agreement, according to the company.

The Raglan operation currently comprises three underground mines, one open-pit mine and a concentrator. The site has year-round road connections to a landing strip at Donaldson and to harbor facilities at Deception Bay. Ore from the mines is processed into nickel-copper concentrate at the Raglan plant, and shipped via Quebec City to Xstrata Nickel's Sudbury smelter for further processing before being sent to Xstrata Nickel's Nikkelverk refinery in Kristiansand, Norway, for refining. Raglan has approximately 580 direct employees and 200 contractors.

PotashCorp Spending $1.6B on New Brunswick Mine/Mill

Potash Corp. of Saskatchewan recently announced plans for a new 2-million-mt potash mine and expanded milling operations in New Brunswick, which will raise the company's projected total annual potash capacity to 14.9 million mt by 2011. The four-year construction project will begin once necessary regulatory approvals are obtained and has an estimated cost of $1.6 billion, which includes $100 million for additional upgraded granular production capability.

According to the company, expansion at New Brunswick is strategically and logistically important, bacause the facility is located close to the company's existing terminal at the Port of Saint John, with the shortest shipping times to key Latin American markets where substantial long-term growth in demand for upgraded potash products is expected. New Brunswick's existing milling, distribution and port facilities can be leveraged to maximize the benefit of the company's investment. Additionally, as the company experiences higher but stable brine inflows at the existing mine, mitigation costs there are expected to remain high over the long term. Water inflow is not expected to be an issue in the new mine. Substantially increasing production in Eastern Canada also further diversifies the sources of PotashCorp's growing potash capacity.

Using conventional underground methods, the new mine will draw on the Picadilly deposit, which contains potash ore grades similar to those found in Saskatchewan deposits. This relatively flat deposit contains two potash seams, each varying in thickness to a maximum of 60 ft, and reportedly will allow for a stable, long-term, low-cost source of potash. Once fully developed, the new mine will replace the existing underground operation, while the current milling facility will be expanded by 1.2 million mt, including 750,000 mt of additional compaction capacity.