Coral Bay Nickel Corporation (CBNC)

CBNC owns and operates the Philippines' first hydrometallurgical nickel processing plant using the high-pressure acid leach (HPAL) process. It has proven to be the most successful HPAL plant in the world in terms of its ability to operate at capacity and achieve low per unit operating costs, resulting in profitable operations. Our subsidiary, RTN, holds a 10% equity interest in CBNC. All the limonite ore required for the plant is supplied by our Rio Tuba mine.

The facility was commissioned in April 2005 at a design capacity of 10,000 tonnes. The facility has operated profitably since it achieved its first full year of commercial operations in 2006. Given the success of the facility, an expansion project to double capacity to 20,000 tonnes per year was undertaken and completed in June 2009. It is expected to achieve production of 24,000 tonnes in 2011. The plant produces a mixed nickel-cobalt sulphide containing approximately 57% nickel and 4% cobalt, which is sold exclusively to SMM for refining at its Nihama Nickel Refinery.

The plant applies the high-pressure acid leach (HPAL) process under license from SMM. The process uses sulphuric acid in high temperature, high-pressure autoclave vessels to leach nickel and cobalt from low-grade lateritic nickel ore. The diagram below illustrates the Coral Bay HPAL process, through which limonite ore is processed into a mixed nickel-cobalt sulphide.

Taganito HPAL Nickel Corporation (THPAL)

Following the success of the Coral Bay HPAL facility, we signed a Shareholders’ Agreement with SMM and Mitsui & Co., Ltd., on September 2010, which incorporates the terms of our new joint venture under THPAL to construct and operate the country’s second HPAL plant. Our Company has a 22.5% direct interest in THPAL and we made our full equity investment of P4.4 billion in November 2010.

The facility will have a capacity of 30,000 tonnes and is estimated to cost $1.4 billion. Similar to Rio Tuba, all the limonite ore required for the plant will be supplied by our Taganito mine over an estimated 30-year project life.

The operation of the facility will not only provide an additional dedicated customer for limonite ore from our Taganito mine, but, through our 22.5% interest, we can account for our share of the earnings of the plant on an equity accounting basis.

Construction work on the new plant is well underway and on schedule for commissioning in mid-2013. The project represents the single largest investment in the Philippines minerals sector to-date.