The Vermelho nickel deposits consist of two hills named V1 and V2 (after Vermelho 1 and Vermelho 2), aligned on a northeast-southwest trend, overlying ultramafic bodies. The ultramafic bodies have had an extensive history of tropical weathering, which has produced a thick lateritic profile of nickel-enriched limonite and saprolite at V1 and V2.

The V1 and V2 deposits form flat lying topographical highs, where V1 body reaches heights of around 500 m, standing out from the adjacent terrain about 175 m whereas the V2 body has a maximum height of 450 m. The flattened terrain adjacent to the two bodies represents the gneiss ground that hosts the layered intrusion of Vermelho. The V2 hill is located approximately 2 km southwest of V1. The V1 hill has a deformed convex-concave shape (convex to northeast), and extends for approximately 2.4 km east-west, ranging from 700 m to 1.6 km north-south. The V2 hill has an east-west elongation, and extends for approximately 1.9 km east-west, ranging from 600 m to 900 m north-south. The V1 deposit has an average thickness of 53 m and a maximum thickness of 146 m, whereas the V2 deposit has an average thickness of 56 m and a maximum thickness of 115 m.

The ultramafic bodies are erosional relicts of the upper sheet of a three-layer intrusion represented, from bottom to top, by a mafic zone (gabbros, gabbro-norites and leuconorites), a pyroxenitic zone (orthopyroxenites and chromitites, with c. 50 m thickness) and a peridotitic zone (serpentinised dunites and harzburgites, with c. 150 m thickness). The northeast-southwest oriented, 10 km long and 2 km wide, layered intrusion has intruded a package of gneisses and migmatites belonging to the Xingu Complex. Late sub-vertical diabase dykes intersect the three layers in different directions. Various chromitite levels have been identified at the southern sides of both V1 and V2 within the pyroxenite zone.

At Vermelho, two main mineralisation types are observed: silicate at the base (saprolite) and oxide at the top (limonite) of the weathering profile.

• Limonite: the oxide material, with 1.2% nickel oxide (NiO) on average, is composed predominantly of goethite, and also contains chlorite, spinels and silica. In this case, the nickel is highly concentrated in chlorite (average 12% NiO), whereas in goethite NiO content ranges between 0.9% and 1.7%. As a result, the presence of chlorite, even in minor quantities, is important in elevating the grade of the oxide ore. Locally, higher grades of mineralisation can also be due to the presence of nickeliferous smectites.

• Saprolite: the mineralogical composition of the silicate zone, with 1.8% NiO in average, consists largely of serpentine, chlorite, and spinels, with quartz and goethite in minor amounts. Serpentine and chlorite are the main nickel-bearing minerals, nickel being about equally distributed between the two phases (2% to 3% NiO). There is no significant development of an enriched transition mineralisation type between the oxide and silicate horizons.

Barren zones within the lateritic profile are represented by serpentinite blocks, strongly silicified bands, mafic or pyroxenitic dykes, and ferruginous concretions (common at the top of the section). A transitional saprolitic zone occurs at the base of the mineralised zone, with nickel grades usually ranging from 0.25% and 0.5%.

The Vermelho laterites are mineralogically similar to the limonitic laterites of Western Australia and, like the Australian ores, are amenable to pressure acid leaching. A possible treatment route of the higher grade saprolite ores is the RKEF process as envisaged for HZM’s Araguaia deposits.

Typical truck and excavator mining using contractors is proposed. The proposed mining cycle would include the following primary activities:
• Grade control
• Clearing, stripping and stockpiling of topsoil
• Drill and blast (where necessary)
• Haulage, stockpiling and re-handling of ore and sheeting material
• Rehabilitation of mining areas with stockpiled topsoil.

Ore will be hauled from the pit to stockpiles or to ROM. Ore from the long-term stockpiles is then re-handled and hauled from these stockpiles to the ROM for further re-handle into the plant.

Waste will be placed on external waste dumps. Pits are not intended to be backfilled at this stage, as the waste component for this Project is low and mineralised material is at the base of the pits which may be economic. Backfilling pits remain an opportunity for the Project to reduce mining costs.

The primary aim of this mining operation will be to maximise margin, particularly in the early life of the mine, and to supply ore to the processing plant so it that maintains a constant acid consumption below 350 kg/t HPAL feed. The mining layout and methodology relies on a combination of mining selectivity and stockpiling. The stockpiling strategy proposed in this study relies on dividing ore into different stockpiling ranges to maximise nickel grade and control acid consumption. The stockpile categories are based on material type and profit per tonne (PPT), or revenue minus processing and sales cost. The material type (primarily limonite and saprolite) controls the magnesium/acid levels. The highest PPT categories will primarily be short-term stockpiles which can be managed on or near the ROM stockpile area. The lower PPT and higher acid consumption material will be placed on larger stockpiles to be fed to the processing plant at the end of the mine life. The processing plant will also use a seven-day equivalent blended stockpile of crushed ore, which will assist in reducing variations in the plant feed.

The process selected for the Project is the production of separate high-purity nickel and cobalt sulphate products via high-pressure acid leaching (HPAL), MSP, POX of the MSP, SX of the leached metals in the POX discharge and crystallisation of the final nickel and cobalt sulphate products and the kieserite byproduct.

The Project has been designed to process 4.34 Mt/a of ROM ore. Of this material, 2.34 Mt/a is rejected as coarse, low grade siliceous waste from the beneficiation plant and 2 Mt/a is fed to the HPAL processing plant as an upgraded concentrate (1 Mt/a per stage).

The processing plant consists of the following main process unit operations:
• Beneficiation
• HPAL
• Slurry neutralisation and residue filtration
• MSP
• POX
• Impurity removal
• CoSX
• Nickel sulphate crystallisation
• Cobalt sulphate crystallisation
• Acid liquor neutralisation
• Kieserite crystallisation
• Sulphuric acid plant
• Reagents and utilities.