LionOre Mining International Ltd.
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LionOre Mining International Ltd.

January 11, 2007 09:05 ET

Nkomati Optimization Increases Reserves and Provides A Revised Resource Statement

TORONTO, ONTARIO--(CCNMatthews - Jan. 11, 2007) - LionOre Mining International Ltd. ("LionOre") (TSX:LIM) (ASX:LIM) (LSE:LOR) (BSE:LIONORE), and African Rainbow Minerals Limited ("ARM"), co-owners of the Nkomati nickel mine in South Africa, are pleased to announce an increase in Nkomati's nickel reserves of 50% from 324,627 Ni tonnes to 485,377 Ni tonnes and a revised resource statement of 942,254 tonnes of nickel, from the previous statement of 674,735 tonnes of nickel. The by-product reserves also increase significantly to 193,783 tonnes of copper, an increase of 43% and 4,181,015 ounces of Platinum Group Metals (PGMs), an increase of 70%.

This revision follows completion of pit optimization studies on a large-scale expansion which included reducing the cut-off grade applied to portions of the Nkomati mineral resource. The investigation has confirmed that a significant portion of the lower grade disseminated mineral resource, previously categorized as waste, is economically extractable at the present market conditions, adding to the open pit mineral reserve.

Commenting on this exciting development, President and CEO of LionOre, Colin Steyn said, "The increase in Nkomati's reserves, combined with the revised resource statement makes this mine a significant nickel sulphide deposit. In line with LionOre's strategy of integrating brownfield mineral resource potential into sustainable metal production, Nkomati forms an integral part of LionOre's long-term growth production profile. In addition, the by-product potential of the chromitite within the PCMZ as well as the dramatic increase in PGMs in both the PCMZ and MMZ now reporting to reserves, is very exciting and will enhance the economics of the Nkomati expansion."

Andre Wilkens, CEO of ARM said, "These results re-affirm the ARM strategy of investing in long life quality assets. The ability to supplement the MMZ production with PCMZ proves the potential of this quality ore body. Adding the chromite to Nkomati's already significant by-products will continue to make Nkomati most competitive from a global perspective."

Nickel, copper, cobalt, chrome and PGM mineralization at Nkomati occur in three distinct ore zones. Closest to surface is the Chromititic Peridotite Mineralised Zone (PCMZ) in the Chromititic Peridotite (PCR) unit. This overlies the Main Mineralized Zone (MMZ) which occurs above the Massive Sulphide Body (MSB), the focus of current mining activities.

Previous evaluation studies on a large-scale expansion had resulted in the overlying PCMZ being categorised mainly as uneconomic due to the modifying factors. However, following LionOre's 50% acquisition, the joint venture partners re-examined the expansion potential and commissioned the pit optimisation studies.

As part of these studies, samples of the PCMZ unit submitted to Mintek in South Africa for metallurgical testing have returned results that confirm economic base metal concentrate grades are obtainable at acceptable recovery rates. In addition, the test work at Mintek has confirmed that the chromite in the PCR unit can be upgraded to a saleable product. This coupled with improved base metal and by-product price forecasts will enable the bulk mining of a larger portion of the PCMZ and facilitates the application of a lower reserve cut-off grade to optimize the previously published mineral resources in Table 1.

Lower Quartile Solutions (Pty) Limited (LQS) was appointed to carry out a revised open pit optimization of the resource using a 0.24% Ni cut-off for the MMZ and a 0.16% Ni cut-off for the PCMZ. The comparative mineral resources and reserves at lower cut-offs are tabulated in Table 2.

The reduction in cut-off from 0.30% to 0.16% Ni for the open pit PCMZ and from 0.35% to 0.24% Ni for the open pit MMZ has unlocked a significant part of the resource that was previously regarded as uneconomic. The main value added lies in the PCMZ. The optimized open pit reserve for the expansion had not previously included the PCMZ, so the 153,342 tonnes of contained nickel that is now available for extraction (Table 2), is additional to previously quoted contained nickel units for the deposit. The contained nickel available for extraction in the MMZ has also increased from 228,215 tonnes to 235,623 tonnes (Table 2).

On the basis of these positive results, LionOre and ARM have commissioned Hatch Africa (Pty) Limited in Johannesburg to proceed with the bankable feasibility study for a large-scale open pit and underground operation to exploit the MMZ and PCMZ. This study will be completed by the end of June 2007.

In this analysis, the additional mineral resources available for potential underground extraction have not been considered in terms of cut-off optimization as studies are still in progress to determine the optimal extraction methodology. As such the quoted mineral resources for the underground PCMZ and MMZ remain as disclosed below and in the latest ARM Annual Report.

All estimates of mineral resources and mineral reserves in the tables which follow have been prepared in accordance with the SAMREC and JORC code and such estimates would not be materially different if prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definitions applicable under National Instrument 43-101.



Table 1 Mineral Resources and Reserves for the PCMZ/PCR and MMZ/LrPXT
at Nkomati Mine as at 30th June 2006 (source African Rainbow
Minerals (ARM) 2006 Annual Report).

Resources
---------------------------------------------------------------------------
Cut-off Tonnes Ni% Ni (t) Cu% Cu(t) 3PGM+Au 3PGM+Au
(Ni %) (g/t) (oz)
---------------------------------------------------------------------------
Indicated
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total MSB
(L3+str) 0.35 44,100 2.12 935 1.08 476 4.8 6,806
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ underg 0.30 48,728,000 0.48 233,894 0.21 102,329 1.03 1,613,687
---------------------------------------------------------------------------
PCMZ underg 0.30 19,100,000 0.40 76,400 0.12 22,920 1.00 614,097
---------------------------------------------------------------------------
Total
MMZ & PCMZ
U/G 67,828,000 0.46 310,294 0.18 125,249 1.02 2,227,784
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ Pits
1 & 2 0.30 8,254,100 0.51 42,096 0.22 18,159 1.08 286,614
---------------------------------------------------------------------------
MMZ Pit 3 0.30 57,339,600 0.48 275,230 0.2 114,679 1.11 2,046,356
---------------------------------------------------------------------------
PCMZ
openpit 0.30 8,161,600 0.40 32,646 0.12 9,794 1.00 262,409
---------------------------------------------------------------------------
Total
Open Pit 73,755,300 0.47 349,972 0.19 142,632 1.09 2,595,379
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Measured
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total MSB
(L1) 0.35 295,000 2.58 7,611 1.48 4,366 8.63 81,853
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ underg 0.35 1,021,128 0.58 5,923 0.21 2,144 1.75 57,454
---------------------------------------------------------------------------


Reserves
---------------------------------------------------------------------------
Cut-off Tonnes Ni% Ni (t) Cu% Cu(t) 3PGM+Au 3PGM+Au
(Ni %) (g/t) (oz)
---------------------------------------------------------------------------
Probable
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total MSB
(L3+str) 0.35 62,000 0.89 552 0.55 341 3.24 6,459
---------------------------------------------------------------------------

---------------------------------------------------------------------------
0.35
for
MMZ develop- 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
underg ment,
0.5 for
stoping
---------------------------------------------------------------------------
PCMZ underg
---------------------------------------------------------------------------
Total MMZ
& PCMZ
U/G 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ Pits
1 & 2 0.35 6,060,000 0.53 32,118 0.23 13,938 1.15 224,065
---------------------------------------------------------------------------
MMZ Pit 3 0.35 49,611,900 0.46 228,215 0.19 94,263 1.12 1,786,518
---------------------------------------------------------------------------
PCMZ
openpit
---------------------------------------------------------------------------
Total
Open Pit 55,671,900 0.47 260,333 0.19 108,201 1.12 2,010,583
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Proved
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total MSB
(L1) 0.35 386,000 1.98 7,643 1.27 4,902 8.37 103,876
---------------------------------------------------------------------------

---------------------------------------------------------------------------
0.35
for
MMZ develop- 330,000 0.59 1,947 0.24 792 1.25 13,263
underg ment,
0.5 for
stoping
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Total
Resource 142,943,528 0.47 674,735 0.19 274,868 1.08 4,969,277
---------------------------------------------------------------------------
Total
Reserve 66,295,900 0.49 324,627 0.20 134,912 1.16 2,463,409
---------------------------------------------------------------------------



Table 2 Revised Mineral Resources and Reserves for the PCMZ/PCR and
MMZ/LrPXT based on calculated lower cut-off grades as at 30th June
2006.

Resources
---------------------------------------------------------------------------
Cut-off Tonnes Ni% Ni (t) Cu% Cu(t) 3PGM+Au 3PGM+Au
(Ni %) (g/t) (oz)
---------------------------------------------------------------------------
Indicated
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total MSB
(L3+str) 0.35 44,100 2.12 935 1.08 476 4.8 6,806
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ underg 0.30 48,728,000 0.48 233,894 0.21 102,329 1.03 1,613,687
---------------------------------------------------------------------------
PCMZ underg 0.30 19,100,000 0.40 76,400 0.12 22,920 1.00 614,097
---------------------------------------------------------------------------
Total MMZ
& PCMZ U/G 67,828,000 0.46 310,294 0.18 125,249 1.02 2,227,784
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ - Pits
1 & 2 0.24 9,762,620 0.48 46,490 0.22 21,041 1.02 319,957
---------------------------------------------------------------------------
MMZ - Pit 3 0.24 76,105,150 0.43 327,252 0.19 144,600 1.1 2,691,599
---------------------------------------------------------------------------
PCMZ
Open Pit 0.20 91,842,625 0.27 243,749 0.08 76,779 0.76 2,243,896
---------------------------------------------------------------------------
Total
Open Pit 177,710,395 0.35 617,492 0.14 242,420 0.92 5,255,452
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Measured
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total
MSB (L1) 0.35 295,000 2.58 7,611 1.48 4,366 8.63 81,853
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ underg 0.35 1,021,128 0.58 5,923 0.21 2,144 1.75 57,454
---------------------------------------------------------------------------


Reserves
---------------------------------------------------------------------------
Cut-off Tonnes Ni% Ni (t) Cu% Cu(t) 3PGM+Au 3PGM+Au
(Ni %) (g/t) (oz)
---------------------------------------------------------------------------
Probable
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total MSB
(L3+str) 0.35 62,000 0.89 552 0.55 341 3.24 6,459
---------------------------------------------------------------------------

---------------------------------------------------------------------------
0.35
for
MMZ develop- 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
underg ment,
0.5 for
stoping
---------------------------------------------------------------------------
PCMZ underg
---------------------------------------------------------------------------
Total MMZ
& PCMZ
U/G 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
---------------------------------------------------------------------------

---------------------------------------------------------------------------
MMZ - Pit
1&2 0.35 6,060,000 0.53 32,118 0.23 13,938 1.15 224,065
---------------------------------------------------------------------------
MMZ - Pit 3 0.24 56,369,084 0.42 235,623 0.19 104,846 1.10 1,993,597
---------------------------------------------------------------------------
PCMZ - Pit 3 0.16 65,251,839 0.24 153,342 0.07 48,286 0.72 1,510,528
---------------------------------------------------------------------------
Total Open
Pit 127,680,923 0.33 421,083 0.13 167,071 0.91 3,728,190
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Proved
---------------------------------------------------------------------------
Area
---------------------------------------------------------------------------
Total
MSB (L1) 0.35 386,000 1.98 7,643 1.27 4,902 8.37 103,876
---------------------------------------------------------------------------

---------------------------------------------------------------------------
0.35
for
MMZ develop- 330,000 0.59 1,947 0.24 792 1.25 13,263
underg ment,
0.5 for
stoping
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Total
Resource 246,898,623 0.38 942,254 0.15 374,655 0.96 7,629,349
---------------------------------------------------------------------------
Total
Reserve 138,304,923 0.35 485,377 0.14 193,783 0.94 4,181,015
---------------------------------------------------------------------------

Note 1: Tonnes have been rounded to nearest 10t and grade has been rounded
to two decimal places. Contained Ni metal calculated on rounded
numbers.
Note 2: Mineral Resources based on June 2006 resource model. Previously
published resources for same area based on 2001/2004 resource
model.
Note 3: 3PGM means platinum+palladium+rhodium
Note 4: Resources are inclusive of reserves


The above Mineral Resources and Mineral Reserves were compiled by Jonathan Woolfe (a full time employee of ARM Limited,) Mark Davidson and Hannes Vermeulen (both full time employees of Nkomati Mine) and Mr Pierre Fourie (Managing Director of Lower Quartile Solutions), all Qualified Persons as listed in the LionOre Annual Technical Statement and Annual Report. All have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity undertaken to qualify as a Competent Person as defined in the 2004 Edition of the JORC "Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves" and The SAMREC Code (South African Code for Reporting Mineral Resources and Mineral Reserves) and are Qualified Persons as defined in the Canadian National Instrument 43-101 (Standards of Disclosure for Mineral Projects).

About Nkomati

The Nkomati mine is situated in the Mpumalanga province in the northeast of South Africa, 300 km east of Johannesburg. LionOre acquired a 50% interest in Nkomati from ARM in June 2005. The mine is currently mining the higher-grade massive sulphide body (MSB), and is one of the lowest cost nickel mines in the world.

In February 2006, the joint venture partners announced approval of the Interim Expansion Project which will extend nickel operations at an estimated capital cost of R384 million (US$62 million). The Interim Expansion Project anticipates mining the disseminated Main Mineralised Zone (MMZ) orebody with commissioning planned for September 2007 and full production, at an annualised rate of 5,000 tonnes of payable nickel, expected by the end of 2007. The expected life of mine is 10 years.

The objective of the Interim Expansion Project is to bridge the gap between the depletion of the MSB and the proposed Expansion Project, planned for 2010. The Expansion Project, envisaged to include an Activox® Refinery, is currently under evaluation by the joint venture partners and the Feasibility Study is expected to be completed during 2007.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements. Such factors include, but are not limited to: exploration, development and operating risks, uninsurable risks, ore reserve and resource estimates, additional funding requirements, foreign countries and regulatory requirements, and environmental regulation and liability. For further information concerning certain such factors, see the Company's most recent annual information form filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com. The Company disclaims any intent or obligation to update any forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, not to put undue reliance on such statements.

Contact Information

  • ARM
    Stompie Shiels
    Operations Executive
    ARMplatinum
    +27 (0) 11 779 1232
    or
    ARM
    Pieter Rorich
    Invester Relations
    +27 (0)11 779 1476
    Website: www.arm.co.za
    or
    LionOre
    Colin Steyn
    President & CEO
    +44 (0)20 7590 8888
    or
    LionOre
    Peter Breese
    Group Chief Operating Officer
    +27 (0)11 463 4223
    Email: info@lionore.com
    Website: www.lionore.com