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Ni, Co, Cu, PGM, Au Properties in Ontario Canada
Producing Mines and "state-of-the-art" Mill
Message: President’s Letter to Shareholders
2007: A Year of Many Accomplishments On behalf of the Board of Directors, I am pleased to present our Annual Report for the year 2007. This was a year of many accomplishments which provided the foundation for a growing mining enterprise for many years to come with a primary focus on the commissioning and startup of a new nickel concentrator at the Redstone mine site. Permitting and construction of the the Redstone Mill ("Mill") was accomplished in record time over a period of 16 months as a result of the tremendous dedication and skill of a team composed of Liberty management, personnel and local contractors in the Timmins area. It was commissioned on July 17 and the first concentrate was shipped to Jilin Jien Nickel Industry Company Limited ("JJNICL") of China on July 30. The Mill is fully permitted to concentrate 1500 tonnes per day of nickel sulphides contained in altered komatiite ore. However, it was designed and built to process up to 2000 tonnes per day of such ore to accommodate a future increase in production. During the first 10 days of processing in August, the success of the project was evident with a metallurgical recovery of 91.7% and concentrate grades ranging 17.7%-22.1% nickel from the Redstone ore; the recovery averaged 89% for the operations during the year. Since altered komatiite ores contain varying amounts of talc which is naturally hydrophobic (floats on water), the operators currently have to react to the talc issues after the fact by adjusting the amount of talc depressant in the flotation cells. The online analyzer ordered in November will allow computerized adjustment of the chemistry in the floatation cells before the talc can become a problem. After installation in the spring of 2008, a metallurgical recovery above 90% should be consistently attained with ore grades above 0.8% nickel. Overall, we are very pleased with the operation of the Mill and are looking forward to commissioning the second and third ball mills together with the extra floatation cells we purchased last year to enable the Mill to run at its permitted capacity later in 2008. In late November, we started shipping our concentrate from the Mill to Xstrata Nickel in Sudbury. The off-take agreement with Xstrata allows us to receive credits for the payable amounts of copper, cobalt, gold and platinum group metals in our concentrate, for which the JJNICL off-take agreement did not provide. We are therefore shipping all of our concentrate to Xstrata to maximize our revenue stream.
Our secondary focus throughout the year was to increase our resource base. We will have three NI 43-101 reports released by mid 2008 to specify the tonnages and grades at the Redstone and McWatters Mines and the Hart nickel project. Deep drilling at the Redstone Mine was very successful with eleven of the eleven boreholes targeting the deeper ore within the projected Redstone channel encountering nickel mineralization. Given the vein-type mineralization style of the nickel sulphides in the Redstone Mine, the high percentage of intercepts suggests excellent continuity of the mineable resource to depth, and further proof that the "INCO anomaly" is primarily associated with nickeliferous massive sulphides. An updated NI 43-101 resource report is scheduled to be produced early in the third quarter of 2008 which will include drilling from within the mine to approximately 580m below surface.
Permits were received for the McWatters Mine November 9 and construction of the portal began shortly thereafter. The access ramp, drift and mine development should be complete in October of 2008 with pre-production ore from development of the upper level sills being shipped to the Mill in June of 2008. Pre-production will ramp up to full production of 1200-1300 tonnes per day in the fourth quarter of 2008. Definition drilling was completed in November to close off the strike of the deposit and provide complete information for the mine plan. A feasibility study was released on April 2, 2008 which stated a resource of 714,870 tonnes of ore grading 0.94% nickel with a mineable reserve of 596,797 tonnes grading 0.92% nickel at a cut-off of 0.6% nickel and a 28 month mine life. With a cash flow of $54 million at a projected US$12.50 price per pound of nickel, the McWatters mine provides an outstanding 385% internal rate of return.
The Hart nickel deposit was the most exciting project during the year with the discovery of a large pool of massive sulphides at approximately 200m below surface. A NI 43-101 resource report is scheduled to be completed by mid June 2008 and will include drilling to at least 500m below surface. This project will become our third nickel mine and the permitting process is underway. We will give our best efforts to bring the Hart Mine into production in the second half of 2009.
The Shaw Dome is steadily giving up its secrets to us. Discoveries deep in the Redstone Mine and the large komatiite flow at the Hart project will establish the Shaw Dome as a renowned nickel belt.
The Groves nickel-copper-platinum group metal project was assembled in September by staking an anomaly around the existing historical claim owned by us. This project was only drilled to 47m deep and an extensive drilling program is planned starting in the last half of 2008. The VTEM geophysical survey was recently completed and has yielded many targets to drill in addition to the known zone. We are enthusiastic to investigate the likelihood of it too becoming a producing mine with high platinum group metal credits. Exploration completed throughout the year provided the data we needed to report a significant resource base in 2008 which will continue to grow from continued diligent exploration. On the cobalt front, two mining claims were purchased at McAra Lake adjacent and south of the main cobalt deposit as part of the option to purchase agreement announced on September 26, 2005. Limited drilling at the McAra Lake cobalt deposit continued to expand the deposit. The rich cobalt ore contains arsenic and there was little point for Liberty to spend a lot of money on developing the deposit without having a buyer for the ore to be mined from it. That problem was potentially solved in March 2007 with the announcement of an off-take agreement with JJNICL for a cobalt-nickel concentrate and financial assistance to build another mill and possibly a hydrometallurgical facility. A drill program will begin at the McAra Lake deposit and the adjacent Ray Township surface trenches in the summer of 2008 to elucidate the structures. If enough tonnage can be proven up over the next two years, Liberty would be unique in the mining industry as a primary producer of two different metals, nickel and cobalt. Liberty is now a producer of nickel, and will continue to build its resources through exploration and acquisitions. With long term commodity prices for nickel and cobalt establishing a higher base, the future is very bright for Liberty. On behalf of the Board of Directors, I would like to thank you for your financial support as we commit to build Liberty into a mid-tier producer of nickel and cobalt. Sincerely, Dr. Gary Nash, PhD (Physics), President and Chief Executive Officer, April 8, 2008
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