Kabanga Project

Description of Operation

The project is located in north western Tanzania, south of Lake Victoria and near the Burundi borders.

Xstrata Nickel is completing a $145 million program that will include additional exploration work, to expand the resource, delineate significant portions of the resource to indicated and measured classifications. A dedicated team has been established to coordinate and advance this work plan in conjunction with the advancement of the pre-feasibility study.

An update to the preliminary resource estimate for the project was announced in February 2007. This confirms the Kabanga nickel project as among the world’s most attractive undeveloped nickel sulphide deposits, with a total estimated indicated resource of 9.7 million tonnes grading 2.37% nickel and a total estimated inferred resource of 36.3 million tonnes grading 2.8% nickel. The revised estimate represents a notable increase from the project’s previous estimate (inferred) of 26.4 million tonnes at 2.6% nickel.

The proposed facility under study is an underground mine, milling and concentrator facility located at the Kabanga site. The concentrate is proposed to transported to the port at Dar es Salaam via road and existing rail infrastructure where it will be shipped to Xstrata’s Sudbury smelter and other custom feed customers.

Brief History of the Operation

In 2005, Falconbridge acquired a 50% indirect interest in the Kabanga nickel project in Tanzania from Barrick Gold, which retains the remainder. Falconbridge was acquired by Xstrata in 2006 and Xstrata Nickel is now the operator of the joint venture.