UPDATE 1-Xstrata Seeks to Extend Life of Australia Zinc Mine

SYDNEY, Mar. 31 -- Swiss-based Xstrata XTA.AX will seek to extend the life of its Black Star zinc mine in Australia by four years to 2016 at a cost of A$133 million ($122 million), a company spokeswoman said on Wednesday.

The mine is earmarked to yield up to 4.6 million tonnes of zinc and lead-bearing ore annually and is major part of a three-mine complex feeding Xstrata's zinc and lead smelting facilities in northern Queensland state.

The extension beyond 2012 will enable the company to maximise use of a nearby ore concentrator, which is being modified to increase input to 8 million tonnes annually from 6.5 million currently, according to the company.

The three mines -- Black Star, George Fisher and Handlebar Hill -- in total yielded 7.4 million tonnes of ore, containing 324,000 tonnes of zinc and 146,000 tonnes of lead.

In 2009, LME zinc averaged $1,595 a tonne, but so far this year has only dipped below $2,000 once. The price MZN3 is now around $2,345 a tonne.

"The extension is still in the proposal stage at this point," the spokeswoman said.

The proposal will be submitted to Xstrata's executive committee for approval in April, she said.