KALBALDA, May 7 -- Australian nickel producer Mincor Resources NL (ASX: MCR) announce that it would move rapidly to recommence production from its flagship Miitel Nickel Mine in Kambalda, Western Australia, creating 100 new jobs and injecting over $130 million into the local and State economy over the next four years.
However, Mincor also today warned that the recently announced resource Super Tax could threaten the future viability of the operation, which it placed on care and maintenance in December 2008 in response to the Global Financial Crisis.
Mincor said it had completed an analysis to assess the impact of the proposed new tax, which indicated that, if the mine was re-started in a post-2012 tax environment, the total tax rate for the Project would increase to a deeply unattractive level of 55%, compared with a rate of 41% (tax + royalty) under current legislation.
Site works have commenced at Miitel ?traditionally Mincor largest producing mine in Kambalda ?with initial production set to resume as early as next month and the ramp-up to full production to commence from July 2010. Steady-state production levels are forecast at approximately 15,000 to 18,000 tonnes of ore per month, yielding between 4,500 and 5,500 tonnes of nickel metal in ore per annum. Life-of-mine cash costs are estimated at between A$5.50 and A$6.00 per pound of payable nickel.
The Miitel Project has been substantially bolstered by the inclusion of the recent N29 discovery comprising a maiden Ore Reserve of 148,000 tonnes 2.7% nickel for 4,000 tonnes of nickel metal.
Not only does this increase the existing Miitel ore reserves by 32%, but it also provides an additional production front within the mine, increasing the overall production capacity. The total capital required to extract this Ore Reserve is estimated at $17 million, most of which will be spent during the 2011 financial year, and all of which will be financed from Mincor existing cash resources.
The re-opening study was based on a total Ore Reserve, including the N29 deposit, of 616,000 tonnes at 2.7% nickel containing 16,400 tonnes of nickel metal, which allows for an initial project life of four years. However, Mincor is increasingly confident that this will grow as a result of recent exploration success to both the north and the south of the existing mine, where three drill rigs are currently operating.
However, any mine life extensions delineated through this exploration program would fall under the new Resource Super Tax and hence their ability to deliver an attractive return on capital is unclear at this stage.
Mincor will operate Miitel using the services of mining contractor Byrnecut, currently Mincor contractor at the nearby Mariners Mine. As with Mariners, the management functions of the mine, including mine planning and engineering, mine surveying and geology will be performed by Mincor personnel. Following Miitel re-start, Mincor will have two mines operated on a contractor basis and two mines operated on an owner-miner basis.
The re-opening of Miitel will create approximately 100 new jobs, and is expected to generate more than $7.8 million in State Royalties and inject over $130 million into the local and state economy. On base case nickel price assumptions of US$9.00/lb, it will generate over A$200 million in export earnings for Australia. All of the ore produced will be toll-treated through BHP Billiton concentrator plant in Kambalda, with the concentrate sold to BHP Billiton under a long term off-take agreement.