Zambia's Munali Lowers 2011 Nickel Output Forecast By 21%

Aug. 2 -- Zambia's sole nickel miner, Munali Nickel Mine has lowered its 2011 nickel production forecast by at least 21% due to lower than expected ore output in the second quarter, Australia-based Albidon Ltd. (ALB.AU), owners of the mine, said late Friday.

The Africa-focused miner said that 2011 nickel output is now projected at 44,000 metric tons of nickel concentrates, from the earlier forecast of 55,500 tons.

"The Munali operation has not delivered the ore quantities and quality as promised thus far. As a result of lower than expected production in Quarter 2 and subsequent events, the full year forecast has been revised" the company said.

During the quarter ending in June, Munali's nickel metal production dropped by at least 19% to reach 719 tons compared with 888 tons produced during the previous quarter. The company also registered revenue of $11.6 million for the June quarter compared with the previous quarter revenue of $15.1 million due to reduced sale volumes and lower nickel prices. The company further said that average nickel reference price for the June quarter was $23,057/ton compared to the March quarter of $25,783/ton.

"Whilst the Nickel reference price has reduced during the quarter, this was offset by improved contained Nickel content in the concentrate sold " the company stated.

Munali has been dogged by a spate of work stoppages occasioned by accidents and miners unrest since May affecting its operations. The mine developed a sinkhole in June, disrupting underground operations. Earlier this month, Munali also suffered subsidence at the surface of the mine forcing management to suspend output for several days as a safety precaution.

According to Harold Ou Wang, Albidon's acting managing director, the company is currently carrying out a strategic review in order to improve ore production from the mine and feed grade to the process plant to boost output.

Albidon had halted output at Munali in 2008 amid low metal prices during the global economic downturn. Last year, China's Jinchuan Group International Resources Co. Ltd. (2362.HK) acquired a majority stake in the mine, giving it the required capital to resume production.

Zambia, Africa's largest copper miner has been trying to diversify its copper-dominated mining sector by encouraging investments in exploration and mining of other minerals.