ARM and LionOre approve Nkomati Chrome Operation
7 July 2006
Johannesburg, July 07, 2006 � African Rainbow Minerals Limited (JSE : ARI) (“ARM”) and LionOre Mining International Ltd (TSX/ASX: LIM, LSE: LOR, BSE: LIONORE), (“LionOre”), co-owners of the Nkomati nickel mine in South Africa, are pleased to announce the approval of a 60,000 tonne per month chrome ore mining and processing operation, following completion of a feasibility study in June 2006.
The feasibility study investigated the viability of a low cost mining and processing operation to exploit the oxidized massive chromitite resource. This resource overlies the nickel mineralization and forms part of the planned Pit 3 prestrip requirements for the future nickel exploitation of the large disseminated nickel sulphide orebodies. A bankable feasibility study on this expansion phase will be completed later in the year.
During the past year, Nkomati has mined and produced approximately 300,000 tonnes of lumpy and chip chrome ore from the exposed resource in Pit 3. This product has been successfully trialed at the nearby Assmang Machadadorp Smelter in the production of charge chrome.
The results of the feasibility study indicate an extremely robust project with a low capital requirement of US$2.2 million (R15.5 million) which will be funded by internal cash flow from Nkomati. The project is expected to deliver an Internal rate of return (IRR) in excess of 200% and based on the current reserve statement will operate for at least 5 years. Construction will commence in Q3 2006 with an anticipated rapid production rampup of two quarters to full production levels expected in Q1 2007. This rampup includes the mining, crushing and screening of run of mine chromite ore to produce an upgraded saleable product with a chrome content of 38% and a chrome to iron ratio of approximately 1.65.
Commenting on the announcement, Colin Steyn, President and Chief Executive of LionOre said, “The chrome operation is a logical step to extract additional economic value from the Nkomati deposit. The anticipated quick project rampup will enable Nkomati to maximize the current demand for superior grade chrome ore.”
Andre Wilkens, the CEO of African Rainbow Minerals commented, “The chromitite ore generated as part of our nickel mining prestrip come as a welcome bonus. It s a very attractive project in it’s own right and will assist hugely towards reducing the stripping costs in setting up Pit 3”.
Chrome Operation Resource
The table below details the chrome mineral resource for just the oxidized massive chromitite.
Mineral Resource � Oxidized Massive Chromitite (31 May 2006)
Category Tonnes %
Measured 1,556,950 34.09
Indicated 5,741,610 33.14
Total 7,298,560 33.34
Inferred 2,373,470 32.85
Total insitu Oxidized Massive Chromite 9,672,030 33.17
The above Mineral Resources were compiled by Mr. Jonathan Woolfe (a full time employee of ARM Limited) a Qualified Person as listed in the LionOre Annual Technical Statement and Annual Report. He has 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 is a Qualified Person as defined in the Canadian National Instrument 43101 (Standards of Disclosure for Mineral Projects).
About LionOre, ARM & Nkomati
LionOre is an international nickel producer with operations in Botswana, Western Australia and South Africa. The company is also commercializing its proprietary hydrometallurgical technology Activox� with the objective of becoming a major vertically integrated nickel producer.
ARM is a nichediversified mining company involved in a wide range of key commodities and manages various operations throughout Southern Africa 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 highergrade massive sulphide body (MSB), which is one of the lowest cost nickel mines in the world, with first quarter 2006 cash costs of $0.39/lb net of byproducts reported.
Johannesburg, 10 July 2006
Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited
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Executive Director: Investor Relations / New Business Development
Tel: +27 11 779 1476
Tel: +27 11 779 1478
Forward Looking Statements Certain statements in this presentation constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934.
Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa; decreases in the market price of commodities; hazards associated with underground and surface mining; labor disruptions; changes in government regulations, particularly environmental regulations; changes in exchange rates; currency devaluations; inflation and other macroeconomic factors; and the impact of the AIDS crisis in South Africa. These forward looking statements speak only as of the date of publication of these pages.
The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of publication of these pages or to reflect the occurrence of unanticipated events.