Australian producer Pacific Nickel Mines began mining saprolite nickel ore at its Kolosori project on Solomon Islands' Isabel island on 1 October, with its first ore shipment expected in November.
The shallow open-pit mining operation can produce up to 1.5mn/yr wmt (wet metric tonnes) of nickel ore, which is subject to port throughput, with total operating costs expected to be around $31/wmt, according to Pacific Nickel. Pacific Nickel and Switzerland-based mining and trading firm Glencore in 2022 signed a six-year offtake agreement for all of the the mine's production during the agreement period.
Offtake is on a take-or-pay basis, so Glencore faces penalties if it fails to take delivery. Ore prices received by Pacific Nickel are linked to agreed 1.5pc direct shipping nickel ore benchmarks, adjusted for ore quality and potential penalty payments. Specifics about the benchmarks were undisclosed.
The two firms signed a $22mn loan agreement for the project in 2022, which Pacific Nickel drew down on and will start fulfilling its three-year repayment obligation after its first shipment. No scheduled repayments are due during wet season months.
Pacific Nickel owns 80pc of the project while local associated landowners own the remaining 20pc. Pacific Nickel in March received an export permit from Solomon Islands' ministry of mines, energy and rural electrification. The permit lasts for three years and can be renewed.
