Pacific Nickel Mines Limited is pleased to provide an update on its two Direct Shipping Ore (DSO) nickel projects in the Solomon Islands. The Company has been working with HBS PNG Pty Ltd, a well-established PNG mining contractor, to finalise the Definitive Feasibility Study (DFS). Following HBS' recent site visit a number of improvements to the mine plan have been implemented which will simplify the mining and stockpile procedures resulting in improved delivery of ore for shipping.

The relocation of the ore stockpiles (to reduce the moisture in the ore prior to shipping) from near the initial mining area to a flat area some 1.0km east of the load out wharf will mean that initial mining is less constricted, and that the mining operation can ramp up to achieve targeted production rates in a shorter period of time. Trenching undertaken at the newly proposed ore stockpile site has confirmed suitable ground conditions. These improvements require some aspects of the mine plan to be re-designed.

As are result, the DFS which was expected to be complete by December has been delayed. It is now envisaged that the initial results of the DFS will be available for release to the market in January 2023. Pacific Nickel continues to work closely with its financiers Glencore, who also recently carried out a site visit as due diligence for a USD 22 million project financing facility and DSO offtake sales.

A Business Licence for mining has been granted by the provincial Isabel Island government. The Company reported that a mining lease application has been submitted for the Jejevo Nickel Project. A preliminary scoping study prepared in support of the mining lease application has demonstrated that the Jejevo Nickel Project could be advanced in much the same way as the Kolosori Nickel Project.

The Company has been working with HBS PNG Pty Ltd, a well-established PNG mining contractor, to establish the project execution plan, optimise work done to date and to provide related capital and operating costs. Following HBS' recent site visit a number of improvements to the mine plan have been implemented which will simplify the mining and stockpile procedures leading to a more robust project delivery of the direct shipping ore onto the barges. The main improvement was relocating the stockpiles (to reduce the moisture in the ore prior to shipping) from near the initial mining area to a flat area some 1.0km east of the load out wharf (refer Figure 1).

This will mean that the initial mining will be less constricted, and that the mining operation can ramp up to achieve the targeted production rate in a shorter period of time. These improvements have led to a change in the mine plan which has had to be re-designed. The flow on effect is that the Definitive Feasibility Study (DFS) has been delayed.

It is now envisaged that the initial results of the DFS will be released to the market in January 2023. HBS has provided mining cost and productivity information that will be incorporated into the DFS. Following completion of the DFS, the Company expects to be in a position to commence formalising a mining contract with HBS in January 2023.

As part of the relocation of the stockpile drying area to the east of the load out wharf on flat terrain (including a flat access road from the bottom of the haul road to the stockpile drying area), the Company diverted work on the wharf to carry out a number of test trenches and pits in the new stockpile area. The results from this work demonstrated that the ground conditions are suitable for the stockpile and access roads. In addition, the infrastructure has been designed to minimise impact on the local environment and has focused on fit for purpose mining contractor facilities whilst maximising local contractor capabilities and materials.

The project areas including mine pits and with support facilities would be developed in strict accordance to mining regulations for good mine practices, allowing for water management and environmental protection. The Company has been constructing a 50-man construction camp which will be used for the capital works prior to production. The buildings are being constructed based on local designs using mine site timbers.

This is a low cost method for constructing the camp which uses local labour and materials. It is anticipated that this approach will be adopted in respect of the main camp and additional residential buildings and project works as required for ongoing capital and operational requirements. At the same time, the Company has undertaken geo-technical trenching and assessment of the newly proposed stockpile site which has confirmed suitable ground conditions.

The Company reported that the Isabel Provincial Government has granted a business licence for mining of the Kolosori Nickel Project. The Company announced that a mining lease application has been submitted for the Jejevo Nickel Project. A preliminary scoping study was prepared in support of the mining lease application on the basis that the Jejevo Nickel Project could be progressed to the feasibility stage simultaneously with preparation of an environmental and social impact assessment (EISA).

The preliminary scoping study also showed that the Jejevo Nickel Project was a "look-alike" for the Kolosori Nickel Project and could be advanced in much the same way. The Company will begin the EISA early next year in conjunction with development approvals associated with the mining lease application.